He also highlighted two recent episodes in the United States that demonstrated how “judgement” was informed by “science” and resulted in appropriate monetary policy decisions in a changing and uncertain economic environment; and he discussed some of the gaps in the science of monetary policy that are likely to be filled in the future.
Growth theories – both the extended neoclassical model and the new “endogenous” growth theories – specify the economy’s aggregate output as a function of capital, employed labour services, that is hours worked by the economically active population, and a measure of technological progress. Capital is broadly defined to include both physical and human capital.