Reassessing constraints on the economy and policy : a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, Aug. 25-27, 2022.
(Book)

Includes bibliographical references.

"Constraints are a central element of economic theory: budget constraints, intertemporal constraints, production possibility frontiers, opportunity costs, and the Phillips Curve. However, over the past two decades, the macroeconomic conversation has been increasingly dominated by concern over deficient demand, with supply constraints fading into the background. Supporting this shift, recent recessions (prior to the pandemic) have been largely attributed to financial disruptions rather than the supply shocks and inflationary dynamics that had driven earlier post-war recessions. ; The economic recovery following the pandemic shock has brought supply constraints back to center stage. Bottlenecks and shortages related to pandemic disruptions have limited supply and pushed up prices. More generally, supply has struggled to keep pace with a surge in demand, supported by historic levels of fiscal and monetary accommodation. Once again, supply constraints are a key factor in the outlook for economic activity. ; While these dormant constraints have reemerged in the broader economy, long-assumed macroeconomic policy constraints seem, at first glance, to have disappeared. Fiscal debt-to-GDP ratios jumped with little apparent effect on the pricing of government debt. Likewise, central banks have greatly expanded their balance sheets with little discussion of associated costs or constraints. Where do the constraints on policy lie? And when are they likely to reemerge?"--Excerpt from Introduction.