The macroeconomy has a long-run equilibrium natural rate of unemployment and GDP from which unanticipated counter-cyclical policy can scarcely nudge the economy.
By suppressing long-run interest rates, the Fed is distorting asset prices, including housing prices that need to fall to restore long-run equilibrium.
George Alogoskoufis, an economist at the Athens School of Economics, and Richard Portes, of the London Business School, argue that shifts in portfolios could push the euro temporarily above its long-run equilibrium level.
In Chile a fiscal law obliges the government to run budget surpluses whenever the economy is at full employment and the copper price is above its long-run equilibrium, as estimated by an independent panel.