I should note that this is described in detail in the paper, "Measuring the Natural Rate of Interest After COVID-19," that was posted this morning on the New York Fed's r-star web page. First, we incorporated an additional persistent supply shock related to the effects of the pandemic that directly reduce the economy's potential. We measure this shock using the Oxford COVID-19 Government Response Stringency Index for each economy.12 This index aggregates measures of government containment and shutdown policies. Because the index is no longer being produced, we assume that in each case, it declines smoothly to zero over 2023-24. Second, we use a statistical procedure that accounts for outliers in the model's estimation. Specifically, from the second quarter of 2020 to the fourth quarter of 2022, we estimate a time-varying process for the variance of the shocks hitting the economy. This procedure places a lower weight on periods when there are very large outliers. Our results show that outliers are particularly large in 2020, as seen in Figure 2. By comparison, the estimated magnitude of outliers is relatively modest in 2021 and 2022. Starting in 2023, we assume that the distribution of shocks is no longer affected by the pandemic. Letting the Data Speak  Estimation of the modified model reveals three key findings. First, the modified estimation procedure yields results that are overall quite similar to those from the original model during the pre-pandemic period. Second, the current estimates of r-star are similar to those estimated directly before the pandemic.
European Central Bank: Press briefing – transcript Transcript by Mr Jean-Claude Trichet, President of the European Central Bank, following the meeting of the Governing Council, Frankfurt am Main, 2 August 2007. *  *  *  Let me just say a few words and then I will be ready to respond to questions, as usual. Recent economic developments and survey indicators confirm that sustained economic growth continued in the euro area through the second quarter. Rising oil prices, emerging capacity constraints and the potential for stronger wage and cost dynamics, among other factors, imply upside risks to price stability over the medium term. The existence of upside risks to price stability at medium to longer-term horizons is confirmed by the strength of the underlying rate of monetary expansion: strong vigilance is therefore of the essence to ensure that risks to price stability over the medium term do not materialise. Both, our previous economic and monetary analysis as expressed in particular in the last press conference have been fully confirmed by the ongoing information we have received since the last meeting of the Governing Council. Let me also stress that we never precommit, we decide at the moment of the meeting of the Governing Council on the basis of the information that we have, facts and figures, and according to the judgement that we make at that moment. I re-emphasise that we never pre-commit.