tourism than that of puerto rico, has also been contracting for the better part of a decade. however, the population of the u. s. virgin islands has not fallen nearly as sharply as puerto rico ’ s, and its economy had stabilized in the past two years following the closure of a major refinery in 2012. still, while by some measures the u. s. virgin islands are not as fiscally stressed as puerto rico, they, too, do not have access to the debt markets. recovery and rebuilding the combined impact of complex preexisting economic problems and the hurricanes has made recovery much more challenging. the loss of market access has severely hampered the ability of the governments to mobilize resources to respond to the damage and rebuild and upgrade infrastructures. one example is puerto rico ’ s electrical grid, which is a major obstacle to recovery. even before maria, puerto rico suffered frequent blackouts, and the high cost and unreliability of electricity 1 / 3 bis central bankers'speeches had reduced business competitiveness. puerto rico ’ s power plants are largely outdated and inefficient, and the electrical distribution system is poorly maintained and extremely fragile. in my mind, given this poor starting point, now is a perfect opportunity for puerto rico to essentially start from scratch and build a resilient power generation and distribution network. i would assume that an emphasis on renewable energy would be part of this effort, especially given the dramatic fall in costs for this form of electricity generation. the challenge, of course, will be how to finance this investment, when the commonwealth is already mired in debt. despite these woes, there are signs of resilience in puerto rico. as we will show, job losses following the storm were very substantial, totaling around 4 percent in puerto rico and 8 percent in the u. s. virgin islands. these losses are considerably steeper than after most major hurricanes that have hit the united states. however, they are not as devastating as katrina ’ s impact on the new orleans economy more than a decade ago, which was and remains unprecedented. nonetheless, the labor market, at least in puerto rico, appears to be stabilizing as jobs in sectors that were most affected — such as leisure and hospitality — have started to come back. and, as repair and rebuilding efforts get underway in both puerto rico and the u. s. virgin islands, jobs are being created in sectors such as construction. these job gains are expected to continue for some

heavily influenced by the inflation experience in one ’ s own lifetime, which implies that decades of too low inflation can become embedded in expectations. indeed, we have seen some worrying signs of a deterioration of measures of longer - run inflation expectations in recent years, as seen in table 2. importantly, this sustained undershoot of the inflation target is likely to be a recurring dilemma for the fed and central banks in japan and europe that have had similar experiences over the past decade. this problem of inflation running chronically below the target stems in part from the limited ability of central banks to offset economic downturns due to the lower bound on interest rates in a low - neutral - rate environment. 7 implications for the monetary policy framework the risk of the inflation expectations anchor slipping toward shore calls for a reassessment of the dominant inflation targeting framework. 8 a number of alternative frameworks and strategies have been proposed that hold the promise of better achieving the inflation goal and holding fast the inflation anchor. 9 in this regard, i am very pleased that the federal reserve is undertaking a review of our policy framework this year, a topic that federal reserve vice chairman clarida will discuss in his lunch remarks today. in summary, the phillips curve is alive and well. i wholeheartedly agree with the authors that we 3 / 4 bis central bankers'speeches must not be complacent about inflation expectations becoming unmoored, whether at too high or too low a level. see john c. williams, inflation persistence in an era of well - anchored inflation expectations, federal reserve bank of san francisco economic letter 2006 – 27, october 13, 2006. 2 see more amazon effects : online competition and pricing behaviors, jackson hole economic symposium conference proceedings ; federal reserve bank of kansas city, 2018. 3 see alan s. blinder, economic policy and the great stagflation, academic press, 1979 4 see tim mahedy and adam shapiro, what ’ s down with inflation? frbsf economic letter 2017 – 35, november 27, 2017, and andrea tambalotti, stefano eusepi, and bart hobijn, condi : a cost - of - nominal - distortions index, american economic journal : macroeconomics, 3 ( 3 ) : 53 – 91, july 2011. 5 see james h. stock and mark w. watson, slack and cyclically sensitive inflation, working paper. 6 see ulrike malmendier and stefan nagel, learning from inflation experiences,