2005 ). see also the recent work by caballero, farhi, and gourinchas ( 2008 ) ; and mendoza, quadrini, and rios - rull ( 2009 ). see, for instance, reifschneider and williams ( 2000 ), blanchard and simon ( 2001 ), and stock and watson ( 2003 ). bis central bankers ’ speeches reconsider that basic assumption. moreover, recent experience in the united states and other countries has taught us that conducting monetary policy at the effective lower bound is challenging. 15 and while unconventional policy tools such as forward guidance and asset purchases have been extremely helpful and effective, all central banks would prefer a situation with positive interest rates, restoring their ability to use the more traditional interest rate tool of monetary policy. 16 the answer to the question “ will the equilibrium interest rate remain at today ’ s low levels permanently? ” is also that we do not know. many of the factors that determine the equilibrium interest rate, particularly productivity growth, are extremely difficult to forecast. at present, it looks likely that the equilibrium interest rate will remain low for the policy - relevant future, but there have in the past been both long swings and shortterm changes in what can be thought of as equilibrium real rates. eventually, history will give us the answer. but it is critical to emphasize that history ’ s answer will depend also on future policies, monetary and other, notably including fiscal policy. concluding remarks well, are the answers all different than they were 50 years ago? no. the basic framework we learned a half - century ago remains extremely useful. but also yes : some of the answers are different because they were not on previous exams because the problems they deal with were not evident fifty years ago. so the advice to potential policymakers is simple : learn as much as you can, for most of it will come in useful at some stage of your career ; but never forget that identifying what is happening in the economy is essential to your ability to do your job, and for that you need to keep your eyes, your ears, and your mind open, and with regard to your mouth – to use it with caution. many thanks again for this award and this opportunity to speak with you. references bernanke, ben s. ( 2005 ). “ the global saving glut and the u. s. current account deficit, ” speech delivered at the homer jones lecture, st. louis, april 14. blanchard, olivier ( 2014

of the business and economics statistics section of the american statistical association, pp. 98 – 104. phelps, edmund s. ( 1967 ). “ phillips curves, expectations of inflation and optimal unemployment over time, ” economica, vol. 34 ( august ), pp. 254 – 81. reifschneider, david, and john c. williams ( 2000 ). “ three lessons for monetary policy in a low - inflation era, ” journal of money, credit, and banking, vol. 32 ( november ), pp. 936 – 66. reinhart, carmen m., and kenneth s. rogoff ( 2009 ). this time is different : eight centuries of financial folly. princeton, n. j. : princeton university press. rogoff, kenneth ( 2001 ). “ dornbusch ’ s overshooting model after twenty - five years ( pdf ), ” speech delivered at the mundell - fleming lecture, second annual research conference, international monetary fund, washington, november 30 ( revised january 22, 2002 ). solow, robert m. ( 2004 ). “ introduction : the tobin approach to monetary economics, ” journal of money, credit, and banking, vol. 36 ( august ), pp. 657 – 63. stock, james h., and mark w. watson ( 2003 ). “ has the business cycle changed and why? ” nber macroeconomics annual 2002, vol. 17 ( january ). tobin, james ( 1969 ). “ a general equilibrium approach to monetary theory ( pdf ), ” journal of money, credit, and banking, vol. 1 ( february ), pp. 15 – 29. u. s. executive office of the president, council of economic advisors ( 2015 ). long - term interest rates : a survey ( pdf ). washington : eop. williams, john c. ( 2013 ). “ a defense of moderation in monetary policy ( pdf ), ” working paper series 2013 – 15. san francisco : federal reserve bank of san francisco, july. woodford, michael ( 2010 ). “ financial intermediation and macroeconomic analysis, ” journal of economic perspectives, vol. 24 ( fall ), pp. 21 – 44. bis central bankers ’ speeches appendix the following model includes a number of elements that play a central role in the analysis of economic fluctuations and in larger policy models as i have encountered them at the federal reserve and other institutions. an aggregate demand