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In the short term, policymakers must judge whether a given policy setting is restrictive or otherwise, and while this judgment is made with some idea of r*, a number of factors can influence the economy in the near term so that the current setting of policy usually differs from the value of r*. At the same time, policymakers continually update their view of the appropriate value of
r*. Recently, for example, discussions have focused on whether or not r* has risen, which has important implications for the conduct of monetary policy.
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