, but rather by the federal reserve's assessment of how changes in asset prices were affecting the forecast of growth and inflation. i would also caution that a symmetrical response to the macroeconomic outlook will need to reflect the inherent asymmetries in business cycles. in the typical boom - bust cycle, asset prices tend to rise relatively gradually over a protracted period but fall sharply in a shorter stretch of time, which financial economists refer to as " rising by the escalator and falling by the elevator. " perhaps because those asset prices are important to spending, key macroeconomic indicators, such as the unemployment rate, exhibit a similar pattern. it is not surprising then that a macro - focused monetary policy will leave an asymmetric footprint in the data. in the end, my humble advice is to evaluate policymakers relative to the tasks the law has given them. in my judgment, the record over the past twenty - five years of steady growth with two mild recessions and gradually declining inflation to a reasonably low level does not betray an asymmetry in our policy responses in the metric that counts – macroeconomic performance.

large. this affirmation has often been reinforced by the granting of operational independence to the central bank to achieve that goal most effectively. an important effect of such public acceptance of price stability is that it erodes the standing of those who would direct central bank action toward other ends. in such an environment, workers, businesspeople, and investors can make plans with the expectation that nominal magnitudes will be predictable and so devote their attention to more productive matters. for the european central bank, this framework was established by treaty. in most other instances, the adoption of an inflation target involved laws and mutual understandings, not constitutional changes. the early adopters of inflation targets were parliamentary democracies, which is not too surprising given that in such a system a single branch of government can enact laws and put them into effect. with regard to an inflation goal, the parliament can erect the formal apparatus and the finance minister can serve as the government's point of contact with the central bank. the system in the united states is different in that two independent branches of government are responsible for economic policy making, making agreement on a single goal problematic. moreover, those two branches have already spoken as to the appropriate aim of the nation's central bank : the congress, in a law the president signed, has given the federal reserve a dual mandate that directs us to foster maximum employment and stable prices over time. this instruction is not an accident of history, in that, in the past, the congress has shown no appetite to amend its legislation. nor is this instruction unreasonable, in that the dual mandate has come to be interpreted as assigning us the responsibility for attaining price stability in the long run, which will bring with it maximum employment, and of being mindful of resource utilization in the succession of short runs that make up the long run. the dual mandate seems proper and fitting, given that economic costs are incurred both by having inflation stray from its long - run goal and by having output deviate from the economy's potential to produce ; and it seems to produce results not too different in practice from those associated with central banks that are flexible inflation targeters. as i said earlier, anchoring expectations has value, in that it makes planning easier, reduces resources spent on predicting and protecting against unexpected variations in nominal magnitudes, and grants a central bank greater scope to lean against fluctuations in output while keeping inflation contained. the latter is particularly attractive given our dual mandate, in that better - anchored inflation expectations