able to distinguish between events that have true long - run significance and those whose effects prove fleeting. in that spirit, i am the first to admit that we do not fully understand the boom and subsequent bust that has occurred worldwide in the high - tech sector - - especially in the telecommunications area. there apparently was overinvestment in the late 1990s, but we do not yet know the exact magnitude. furthermore, we don't understand how this overinvestment should be factored into our analysis of productivity growth over this period. it seems straightforward not to count nonproductive capital as part of the productive capital stock. but should we also exclude the value of such equipment from our measures of output as well? these tricky questions are important for us to resolve. similarly, i don't think we yet fully understand the role of year 2000 preparations in either the late 1990s investment boom or the acceleration in productivity. billions of dollars were invested to fix the y2k bug, and we don't know how much of that spending was for the replacement of obsolete systems ( and hence should be considered as depreciation in measuring the stock of available capital ) or for the expansion and upgrading of systems ( which, parenthetically, is the assumption we use in all our growth accounting exercises ). but although these y2k remediation efforts were costly and at times painful, virtually all the business leaders i know would assert that the efforts produced significant efficiency gains in the use and management of their information systems. thus, the net effect of y2k on our economy is still very much an unanswered question, and i'd like to see the research community systematically assess it. current and prospective productivity growth the cyclical slowing in 2001 and gradual expansion in 2002 have raised a critical issue. that question is : will productivity growth in the years ahead more closely resemble the substantial gains over the 1960 - 73 period or the weaker performance of the 1973 - 95 slowdown? i tend to believe that future growth will most likely follow the 1960 - 73 pattern, and the most recent record of productivity growth reinforces that view. productivity is a cyclical variable that typically falls in recessions. however, during the most recent downturn, productivity never declined and instead continued to grow at a fairly strong pace. moreover, after the tragic events of september 11, many economists feared that the u. s. economy would weaken substantially and that productivity growth would suffer a severe setback as well. in

food and energy prices critically affect the budgets of households and businesses, the policy tools of central banks work more slowly than commodity markets move. responding aggressively to quickly passing price increases could exacerbate macroeconomic volatility without supporting price stability. our experience since 2020 highlights some limits of that thinking. to begin with, it can be challenging to disentangle supply shocks from demand shocks in real time, and also to determine how long either will persist, particularly in the extraordinary circumstances of the past three years. supply shocks that have a persistent effect on potential output could call for restrictive policy to better align aggregate demand with the suppressed level of aggregate supply. the sequence of shocks to global supply chains experienced from 2020 to 2022 suppressed output for a considerable time and may have persistently altered global supply dynamics. such a sequence calls on policymakers to use policy restraint to limit inflationary effects. policy restraint in this case is also good risk management. supply shocks that drive inflation high enough for long enough can affect the longer - term inflation expectations of households and businesses. monetary policy must forthrightly address for an example in the context of energy price shocks, see martin bodenstein, christopher j. erceg, and luca guerrieri ( 2008 ), “ optimal monetary policy with distinct core and headline inflation rates, ” journal of monetary economics, supp., vol. 55 ( october ), pp. s18 – 33. - 6any risks of a potential de - anchoring of inflation expectations, as well - anchored expectations help facilitate bringing inflation back to our target. the sharp policy tightening during 2022 likely contributed to keeping inflation expectations well anchored. my third question is the level where interest rates will settle once the effects of the pandemic are truly behind us. by 2019, the general level of nominal interest rates had declined steadily over several decades ( figure 4 ). as the pandemic arrived, many advanced economies had below - target inflation and low or mildly negative policy rates, raising difficult questions about the efficacy of interest rate policy when constrained by the effective lower bound ( elb ). over two decades, an extensive literature had identified a number of possible changes to the widely used inflation - targeting regime, including negative policy rates, nominal income targeting, and various forms of makeup strategies under which persistent shortfalls in inflation would be followed by a period of inflation running moderately above 2 percent. 9 today, inflation and policy rates are elevated, and the elb is not currently relevant