recent weakness in investment, ” feds notes ( washington : board of governors of the federal reserve system, november 21 ). their analysis indicates that investment growth over the expansion has been consistent with a model using business output growth and the user cost of capital. in a second model, they show that the modest increases in the capital stock are consistent with the increase in labor supply and tfp. over long periods of time total factor productivity is primarily driven by innovation, knowledge and the efficiency with which inputs are put to use owing to the evolution of business practices as well as the influences of public capital stock, government regulations and other factors. over shorter periods of time tfp will also capture the variations in the intensity of utilization of inputs, such as capacity utilization and hours per worker. disentangling tfp from capital deepening and hours worked can be challenging. see, for example, ryan decker, john haltiwanger, ron jarmin, and javier miranda ( 2014 ), “ the role of entrepreneurship in u. s. job creation and economic dynamism, ” journal of economic perspectives, vol. 28 ( summer ), pp. 3 – 24. see john fernald ( 2014 ), “ productivity and potential output before, during, and after the great recession, ” nber macroeconomics annual, vol. 29, no. 1 ( cambridge, mass. : national bureau of economic research ). some have argued that part of the tfp slowdown may actually be a measurement problem, owing to the difficulty in measuring the productivity of health care, information technology, and other services. others see the evidence for that claim as weak. for example, a recent paper finds little evidence that the slowdown arises from growing mismeasurement in information - technology - related goods and services. see david m. byrne, john g. fernald, and marshall b. reinsdorf ( 2016 ), “ does the united states have a productivity slowdown or a measurement problem? ” brookings papers on economic activity, march 4. on the pessimistic end of the spectrum are analysts such as robert gordon ; among the optimists are erik brynjolfsson and andrew mcafee. see robert j. gordon ( 2016 ), the rise and fall of american growth : the u. s. standard of living since the civil war ( princeton, n. j. : princeton university press ) ; and erik brynjolfsson and andrew mcafee ( 2014

. federalreserve. gov / monetarypolicy / fomcminutes20130918ep. htm on the board ’ s website. bis central bankers ’ speeches committee ’ s two objectives of maximum employment and price stability are complementary. when they are not, the fomc has stated that it will pursue a balanced approach in the pursuit of its dual mandate, working to ensure that both inflation and employment are close to their desired values in the longer term. in short, the federal reserve, like many central banks around the world, has made significant progress in recent years in clarifying its goals and policy approach, and in providing regular information about the future path of policy that it views as most likely to attain its objectives. this increased transparency about the framework of policy has aided the public in forming policy expectations, reduced uncertainty, and made policy more effective. the financial crisis and its aftermath, however, have raised even greater challenges for, and demands on, the federal reserve ’ s communication. we have had to contend with the persistent effects of the seizing - up of the financial system, the collapse of housing prices and construction, new financial shocks in europe and elsewhere, restrictive fiscal policies at all levels of government, and, of course, the enormous blows to output and employment associated with the worst u. s. recession since the great depression. moreover, for the first time since the fomc began using the federal funds rate as its policy interest rate, that rate is effectively at zero and thus cannot be lowered meaningfully further. consequently, to provide needed support to the economic recovery and minimize the risk of deflation, the federal reserve has had to adopt new policy tools, which bring their own communication challenges. in the remainder of my talk, i will discuss how the federal reserve has used communication to try to further inform the public ’ s expectations about how the fomc will employ what are currently its two principal policy tools : its plans regarding its short - term policy interest rate and its large - scale purchases of securities. forward guidance about policy interest rates as the economy weakened over 2008, the fomc repeatedly cut its target for the federal funds rate, its short - term policy rate. in december of that year, the target for the funds rate was reduced to a range of zero to 1 / 4 percent, and money market rates declined nearly to zero. thus, using the standard means of further easing monetary policy – cutting the target interest rate – was no