the fed and the markets : a failure to communicate? ( new york : goldman sachs, september 20 ). see alan s. blinder, michael ehrmann, marcel fratzscher, jakob de haan, and david - jan jansen ( 2008 ), “ central bank communication and monetary policy : a survey of theory and evidence, ” journal of economic literature, vol. 46 ( december ), pp. 910 - 45. see ben s. bernanke ( 2004 ), “ central bank talk and monetary policy, ” speech delivered at the japan society corporate luncheon, new york, october 7, https : / / www. federalreserve. gov / boarddocs / speeches / 2004 / 200410072 / default. htm. - 6outlooks, risk assessments, and objectives. 10 the whole forward interest rate curve matters for financial conditions, not just the overnight rate. monetary policy was therefore thought to be made more effective by communication of the full expected path of policy, which could then be incorporated into private - sector expectations and longerterm interest rates. but all along, there have been other voices urging caution and asking, in effect, “ how much transparency is too much? ” as don kohn noted in 2005 remarks, “ more is not necessarily always better ” when it comes to fed communication. 11 critics have often argued that too much discussion of the likely path of policy could be taken as a commitment to a particular path and timing and could ultimately constrain the committee from pursuing what it views to be the optimal path. indeed, to the extent that the committee ’ s talk about the path of policy is given weight, that talk may leave “ too little scope for private assessments of economic developments to show through ” in market prices. 12 jon notes in his paper that communications about monetary policy generally received high marks from 2008 through early 2013, and he focuses his analysis on the challenging period since mid - 2013. i am also going to skip over the years 2013 - 14, which included the “ taper tantrum ” and the relatively uneventful taper itself. i will focus instead on the years 2015 - 16, which seem to me to be the most relevant to the challenges see ben s. bernanke ( 2004 ), “ the logic of monetary policy, ” speech delivered at the national economists club, washington, december 2, https : / / www. federalreserve. gov / boarddocs

), january 2012, september 2013, september 2014, september 2015, and september 2016 ( documents available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm ). 2. 0 figure 6. longer−run unemployment rate projections from the sep percent 6. 5 6. 0 5. 5 5. 0 4. 5 jan. sept. sept. sept. sept. note : the whisker bars show the central tendency, and the line shows the midpoint of the central tendency. source : summary of economic projections ( sep ), january 2012, september 2013, september 2014, september 2015, and september 2016 ( documents available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm ). 4. 0 figure 7. sep projected federal funds rate : taylor percent intercept : 2 percent intercept : 0. 9 percent −1 source : summary of economic projections ( sep ), september 2016 ( document available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm ) ; john b. taylor ( 1993 ), " discretion versus policy rules in practice, " carnegie−rochester conference series on public policy, vol. 39 ( december ), pp. 195−214. figure 8. estimation of short−run, time−varying r * is equation relates the unemployment gap to the lagged unemployment gap and the lagged real interest gap as follows : ( ut + 1 − u * t + 1 ) = α × ( ut − u * t ) + β × ( rt − r * t ) α = 0. 86 and β = 0. 14 use median values of the longer−run unemployment rate, the unemployment rate, and the real federal funds rate from the september 2016 summary of economic projections to solve for the implied short−run, time−varying r * note : is is investment and saving. source : federal reserve board staff. figure 9. sep projected federal funds rate : taylor percent intercept : 2 percent intercept : 0. 9 percent intercept : r * −1 note : r * calculated as in figure 8. source : summary of economic projections ( sep ), september 2016 ( document available on the board ’ s website at