bank may need to make commitments about how it will act in the future – commitments that must be credible but that, ex post, the central bank might find hard to follow through on. for canonical papers, see kydland and prescott ( 1977 ) and lucas and stokey ( 1983 ) ; see also fischer ( 1980 ). the early literature focused on the inability of central banks, in normal times, to commit to high future interest rates and low inflation. interestingly, at the zero lower bound, central banks may face nearly the opposite commitment problem : to escape a liquidity trap, a central bank may want to commit to keep interest rates low and accommodate an output boom even after the headwinds from a crisis have dissipated. see, for example, eggertsson ( 2006 ) and werning ( 2012 ). for additional discussion of federal reserve communications, see yellen ( 2012 ) and stein ( 2014 ). for a discussion of the federal reserve ’ s remittances, see yellen ( 2013 ). though it is likely that remittances to the treasury will decline later in the decade as interest rates increase, such developments would not impair the federal reserve ’ s conduct of monetary policy, and it is highly likely that average annual remittances over the period affected by our asset purchases will be higher than pre - crisis norms. in addition, the asset purchases also affect treasury revenue by lifting economic activity and thereby tax revenue, as well as by lowering interest rates and thereby debt service costs. regarding the effects on foreign asset markets, see neely ( 2011 ) ; fratzscher, lo duca, and straub ( 2013 ) ; and rogers, scotti, and wright ( 2014 ). regarding the effects on emes, it appears that both conventional and unconventional policies in the united states – among other factors – have driven capital flows into emes. see, for example, ahmed and zlate ( 2014 ) and bowman, londono, and sapriza ( 2014 ). see, for example, d ’ amico and king ( 2013 ) ; gagnon and others ( 2011 ) ; gilchrist, lopez - salido, and zakrajsek ( 2014 ) ; and hamilton and wu ( 2012 ). see, for example, yellen ( 2011 ). bis central bankers ’ speeches the recovery from the financial crisis despite monetary stimulus, the recovery from the financial crisis has been even more sluggish than we had expected

: in the public sector, gaps in the regulatory structure allowed important financial institutions to escape comprehensive supervision, and regulators were insufficiently focused on the stability of the system as a whole. the views that i offer are my own and not necessarily those of any other member of the federal open market committee or of the committee itself. for a model in which fire sales can arise from uncertainty about the network of cross - exposures among banks, see caballero and simsek ( 2013 ). the fallout from the crisis was large even in countries that had not experienced an acute financial crisis. as an example, in six asian countries, including china and india, exports fell more than 30 percent by the beginning of 2009, and industrial production declined about 10 percent. see the discussion of china, india, indonesia, malaysia, thailand, and taiwan in coulibaly, sapriza, and zlate ( 2011 ). regarding the role of credit conditions in the collapse of international trade, see chor and manova ( 2012 ). bis central bankers ’ speeches the federal reserve responded aggressively to the crisis. 4 by the end of 2008, the federal open market committee ( fomc ) had reduced the target federal funds rate from 5 – 1 / 4 percent to, effectively, zero. the fed also acted forcefully as the lender of last resort – in its traditional role of providing short - term liquidity to depository institutions, and also by providing liquidity directly to borrowers and investors in key credit markets. 5 in addition, the worldwide scope of the crisis called for concerted international action. because of the global nature of dollar funding markets, the fed authorized dollar liquidity swap lines with major central banks, beginning in december 2007. in october 2008, central bankers coordinated reductions in policy rates and the group of seven agreed to use all available tools to prevent the failure of systemically important financial institutions. 6 the next month, the group of twenty announced a broad common strategy, including fiscal expansion. these steps likely prevented a second great depression, but they were not sufficient to avoid a severe global contraction. in the united states, with the federal funds rate at its effective lower bound by the end of 2008, the fomc judged that it could not provide much additional accommodation via its conventional tool – reducing the federal funds rate. 7 instead, the fomc used two unconventional tools : large - scale asset purchases and enhanced forward guidance. to varying extents, foreign central banks have also been using