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Monetary Policy in a Slow (to No) Growth Labor Market
For decades, economists and policymakers have argued about the meaning of full employment. Those debates are getting more vigorous. Historic changes in labor force growth have resulted in a job count that is barely rising and a labor market that feels static, even stuck—a significant departure from the usual experience of full employment. This presents several challenges for monetary policy—both for calibration and communication. These challenges are likely to intensify as U.S. demographic trends continue to unfold. So how did we get here? Figure 1 tells the story. It plots U.S. labor force growth over the past ... (full story)
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