Taking into account the uncertainty of the state of the world is the hallmark of good policymaking in economics. Moreover, r* and other stars are just one of many inputs in this process.

The pattern of r* paths for other countries seem more alike to each other than they are to the U.S.

Thomas Lubik and Christian Matthes discuss how economists wrestle with measuring the natural rate of interest or r-star, why this measure is important for monetary policymakers, and how their model has evolved to better chart the path of interest rates. Lubik is a senior advisor at the Federal Reserve Bank of Richmond and Matthes is a professor of economics at Indiana University.

The updates result in a less volatile r* series that more closely reflects our prior belief as to where r* likely is.

Declining gasoline prices have contributed to an easing of inflation and lower inflation expectations, working in tandem with the FOMC's efforts to bring price levels down. But how hard is monetary policy tapping on the brakes of the economy?

Has the natural rate of interest lost its luster as a navigation aid for monetary policy?