For these kinds of structural reasons, an employment mandate is unlikely to be effective. More likely, we would find ourselves in Arthur Burns’ shoes: we would not get unemployment permanently lower, but we would be stuck with higher inflation, making our growth and jobs challenges even worse. We want to be crystal-clear that we won’t make that mistake.
With inflation well anchored, moves to lower interest rates should get us more real growth than inflation. And this is exactly where we are now. But doesn’t everyone have low inflation now? Isn’t this due to the coronavirus, not monetary policy?