in government spending – starts out at about 1 but then quickly falls to zero as long - term interest rates rise so that private spending and exports decline. however, if financial market participants anticipate that the federal funds rate will remain at zero for an appreciable period of time following the hike in government spending, the simulated short - run fiscal multiplier rises to 1. 3 for some time. model simulations also indicate that the fiscal spending multiplier may rise even further – to around 2 – if the fiscal stimulus is expected to be temporary and to last no longer than the period when monetary policy holds short - term interest rates at the zero lower bound. 4 to be sure, greater - than - usual uncertainty surrounds estimates of the size of the fiscal multiplier under current circumstances, and its magnitude could be somewhat smaller than suggested by these model simulations. with lenders unusually cautious, household and business spending may react less than would normally be expected to low real interest rates because tight nonprice credit terms are restricting access to borrowed funds. also, the above - normal levels of uncertainty faced by households and firms could damp the responsiveness of consumption and investment spending to the boost in household income and business earnings generated by the fiscal stimulus. finally, any increase in uncertainty about the longer - term trajectory of government borrowing could raise term premiums. of course, sustained changes in fiscal policy may have supply - side implications that affect the long - run level of potential output, and hence actual gross domestic product. except to the extent that these long - run changes alter the equilibrium real rate of interest, however, they have only minor implications for monetary policy. in the frb / us model, about 40 percent of households are estimated to be rule - of - thumb consumers, implying that they generally spend most of their current income. the remaining households are life - cycle consumers, implying that their spending decisions are influenced by their expected permanent income rather than their current income. however, these consumers are nonetheless relatively sensitive to expected changes in income over the next several years because they are assumed to discount future income at a high rate, reflecting its uncertain nature. these basic results are also borne out by simulations using the federal reserve staff's estimated dynamic stochastic general equilibrium ( dsge ) model of the u. s. economy, edo, and its calibrated multicountry dsge model, sigma. nontraditional monetary policies current economic and financial conditions have not only changed the potential effectiveness

a broad array of independent academic research aimed at adding to the general knowledge and understanding of the economy. each year, fed staff members publish hundreds of papers and others forms of research, sometimes in collaboration with scholars from universities and other institutions, all of it available for use by the research community and on view to the public. conferences play an integral role in promoting the federal reserve ’ s research mission as well. this biennial community development research conference, organized by community development officials from across the federal reserve system, serves to encourage high - quality research see pew research center ( 2014 ), “ emerging and developing economies much more optimistic than rich countries about the future ( pdf ) “ ( washington : prc, october ). see ben s. bernanke ( 2007 ), “ the level and distribution of economic well - being, ” speech delivered at the greater omaha chamber of commerce, omaha, neb., february 6. see janet l. yellen ( 2014 ), “ perspectives on inequality and opportunity from the survey of consumer finances, ” speech delivered at the conference on economic opportunity and inequality, sponsored by the federal reserve bank of boston, boston, mass., october 17. bis central bankers ’ speeches and also helps bridge the gap between community development research, policy, and practice. in my brief remarks, i would like to mention a few aspects of economic mobility that i think are particularly important and worthy of further research, with the hope of stimulating the conversation that will take place here over the next couple of days. this conference will explore economic mobility as it is influenced by or affects families, communities, and the economy, so let me touch on each of those three facets. we know that families are the locus of both opportunities and barriers to economic mobility. there are important research questions to be tackled here. what individual or family characteristics may predict who will achieve upward mobility? how much does someone ’ s initial circumstances in life influence how far that person can get or how hard he or she needs to work to get there? researchers and policymakers need a better understanding of how much mobility individuals may experience over the course of their lives and at what age people ’ s outcomes may become more difficult to change. families are the source of many of the resources and experiences that influence economic mobility, and more research can help us understand to what extent and in which ways differences in the economic circumstances of families affect the upward mobility and economic security of offspring. research may be able to provide evidence on which public policies are