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Searching for Maximum Employment
The Federal Reserve’s mandate includes a commitment to “maximum employment.” As described in the Fed’s monetary policy strategy, this is “a broad-based and inclusive goal that is not directly measurable and changes over time” (Board of Governors 2021). Moreover, it is not captured by any single indicator such as the unemployment rate but instead reflects assessments of a wide range of indicators (see, for example, Gilchrist and Hobijn 2021). Two key indicators are the labor force participation (LFP) rate, which measures the fraction of the working-age population age 16 and older that is employed or ... (full story)