Minnieapolis Fed president out on the wires from a planned event in Frankfurt

  • long-run neutral real interest rate has declined significantly
  • fiscal authorities can boost neutral rate
  • not arguing for govts to issue more debt, which has its own costs

"I want to be clear at the outset that I am not saying it is appropriate for fiscal policymakers to increase the long-run level of public debt. I am simply pointing to one benefit associated with such an increase: it allows the central bank to be more effective in mitigating the impact of adverse shocks to aggregate demand"

Ok, so he's a long-time dove and leaving the Fed at the end of the year but is anyone out there really still looking for a 2015 rate hike ?. Not gonna happen IMHO

Kocherlakota - Real interest rate decline makes Fed's job harder