s simple dynamics, report prepared for the 2017 u. s. monetary policy forum, sponsored by the initiative on global markets at the university of chicago booth school of business, held in new york, march 3, https : / / research. chicagobooth. edu / % 7e / media / 806fc2ded9644b5da99518d2b07cc637. pdf. - 7estimates from models and slowly evolving surveys must be balanced against the cost of treating the noise in the asset price as a signal. there is no unique way to do this, and judgment is required. in conclusion, while my colleagues and i are attuned to the potential for a hall of mirrors problem, in my experience this affliction is one the federal reserve guards against and does not suffer from. my colleagues and i do look at developments in asset markets, but never in isolation and always in the context of balancing asset market signals with complementary signals from surveys and econometric models. it is fair to say that when signals from all three sources line up in the same direction — as, for example, has been the case with market -, survey -, and model - based estimates of r * — the effect of those combined signals, at least on my thinking about the policy path, is more material than when the signals provide conflicting interpretations. thank you for your attention. i look forward to hearing from the other panelists and to our discussion.

impart knowledge about the depth and extent of trading and the willingness of financial intermediaries to serve as market makers. by reviewing the sizes of issuance of various financial instruments as well as trade volumes in a number of markets, we try to assess the relative strength and resilience of markets. and we try to assess the reliability of prices by reviewing information on bid - ask spreads and quote sizes where available. of course, these various price and volume indicators are not easy to disentangle, necessitating that our judgments on the state of market functioning customarily be provisional. throughout the turbulence of the past few months, we have followed a number of indicators that pointed to strains in several markets. for example, we saw spreads on subprime we should also recognize that financial instability is symmetric and could arise equally when credit flows too freely or at prices that are too low. those were the words used by then - chairman alan greenspan in his comments on the 1998 financial crisis. alan greenspan ( 2000 ), " technology and financial services, " speech delivered before the journal of financial services research and the american enterprise institute conference, in honor of anna schwartz, washington, dc, april 14, www. federalreserve. gov / newsevents. htm. residential mortgage - backed securities soar and securitization volumes slow to a trickle as market participants became concerned about their ability to value those products amid mounting delinquency rates and defaults in the sector. investors'lack of confidence in valuations was also apparent in other securitized products, as evidenced by higher spreads and lower issuance in markets for collateralized debt obligations and collateralized loan obligations. the asset - backed and the lower - grade unsecured commercial paper markets also came under pressure ; difficulties spread to other money markets, and term spreads in interbank funding markets climbed much above historical levels. it is also true, however, that some financial indicators provided some reassurance during this period. important parts of the financial system continued to function well, especially in markets where less - complex financial products are traded and where investors are less reliant on the role of the rating agencies. for example, although equity markets were quite volatile at times, trading was generally not impaired, and investors were able to buy and sell stocks at market - prevailing prices, even at the times of greatest turbulence. the markets for longer - term treasury securities and investment - grade corporate bonds generally continued to function well