Should monetary policy set different objectives if prices are highly flexible and the costs of inefficient price dispersion are much smaller than presumed? Too early to tell, of course, but definitely worth an in-depth investigation. Meanwhile, I welcome advances made in measuring macroeconomic aggregates in the digital economy, in particular consumer prices.
However, the Federal Reserve and the Treasury agree that the risks and potential costs to consumers, municipalities, small businesses and others who depend on AIG for insurance protection in their lives, operations, pensions, and investments, as well as the risks to the wider economy, of not providing this assistance during the current economic environment are unacceptably large.