(Reuters) - U.S. fiscal and monetary policymakers probably do not have enough ammunition to adequately battle a future economic downturn unless big changes are made to the tools they have, according to research by a Federal Reserve regional president.
Existing policy buffers, including fiscal, monetary and banking regulations, “may not be sufficient to offset future shocks, reducing the capacity available to policymakers to insulate the economy from future adverse shocks,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in the paper, which is to be presented at a conference this weekend. Fiscal policies, in particular, are likely to help different U.S. states to different degrees, depending on what industries their economies rely on, leaving some far behind, the paper said.
“More attention should be given to establishing appropriate policy buffers to mitigate future shocks,” Rosengren and his co-authors said.
Reporting by Ann Saphir; Editing by Leslie Adler