choice problem into two distinct questions about the future course of the economy. the first is a collective one for american society : given the projected path for macroeconomic aggregates like consumption, output, and employment, are there alternative ( but resource - feasible ) paths that would be preferred? the second is a technical one for economists : given a desired path, what policy choices ( specifically, taxes and subsidies ) would give rise to that desired path? the answer to this second technical question is typically model - dependent. however, i suggest that a long - favored prescription of public finance economists – to lower the tax rate on physical investment – would give rise to higher output, consumption, capital, and employment in a wide range of models. this potential approach seems especially relevant given hall ’ s focus on the decline in capital over the past five or six years. 1 just to be clear : i ’ m not suggesting that the declines in economic activity described by hall are attributable to increased tax rates. bis central bankers ’ speeches mid - 20th century evidence the first part of my discussion centers on the evolution of macroeconomic data during and after the great depression. the great depression started in the united states in 1929. by 1933, key macroeconomic aggregates like tfp, real output, employment, and capital had declined sharply relative to their historical trends. the unemployment rate had soared from under 5 percent to over 20 percent. i examine the recovery of each of these variables in turn. i ’ ll begin with total factor productivity. cole and ohanian ( 1999 ) document that, by 1933, tfp was about 15 percent below trend. 2 it might well seem intuitive that such a profound decline would be challenging to reverse. but during the depression, tfp grew so rapidly that it had recovered to its pre - depression trend within three years after bottoming out in 1933. 3 there was also a dramatic turnaround in real output, employment, and unemployment, but this turnaround was much more delayed. ten years after the start of the great depression, real output remained about 25 percent below trend, employment was about 18 percent below trend, and the unemployment rate remained above 15 percent. it would have been natural to conclude that such persistent changes would prove to be permanent. of course, such was not the case. real gross domestic product ( gdp ) almost doubled from 1939 to 1944. 4 the unemployment rate fell by 13 percentage points in three years, falling from nearly 15 percent in 1940 to under 2 percent by

lenders had identified the vast majority of affected customers, the bank would continue to review and challenge the work undertaken by the lenders and complete an intrusive on - site inspection programme. this work has been critically important in ensuring that lenders identify any remaining cases and accept cases for redress and compensation which they had previously excluded. as of end - march 2018, approximately 37, 100 customers have been accepted by lenders as having been affected by tracker mortgage failings. this was an increase of 3, 400 customers since december. the redress and compensation phases of the examination are significantly advanced. to endmarch, €459 million has been paid out to consumers, an increase of €162 million since december. some 88 percent of affected customer accounts identified and verified have received offers of redress and compensation. we expect further offers of redress and compensation to be made to the remaining 12 percent by the end of june. provisions by lenders in respect of the tracker mortgage examination increased to €969 million by the end of march – of which approximately €626 million is attributable to redress and compensation and €343 million to costs. in short, the cost to lenders is fast approaching the €1 billion mark. i would note that payments may extend beyond that date for those customers who are newly identified and verified in the coming weeks. however, as redress and compensation schemes are underway across all lenders, the central bank expects that any such additional accounts identified will be swiftly remediated. our review and supervisory challenge work is ongoing but, while this work is well advanced, it will not be completed until we are satisfied that all affected customers have been identified, redressed and compensated. this work is extensive and complex : while we are confident that most of the affected customers have been identified, we expect that there will be some further increase in the numbers affected before the examination is concluded. we have initiated enforcement proceedings against six lenders : permanent tsb plc ; ulster bank ireland dac ; bank of ireland group ; kbc bank ireland plc ; allied irish banks, plc ; and ebs dac. in these investigations, the central bank is considering all possible angles, including potential individual culpability. it is important to stress that numbers alone cannot give the full picture of the detrimental, and in some cases, devastating effects that the failures of lenders have had on tracker mortgage customers, up to and including the loss of homes and properties