Bernanke had some specific proposals that could serve as advice for the Fed today. One set of options would have it take a larger role in financial markets. Short-term interest rates may be zero, unable to go lower, but longer-term rates aren’t. So the Fed, which typically buys only short-term U.S. government debt, could expand its portfolio, buying long-term government debt, bonds backed by home mortgages and so on, in an effort to drive down the interest rates on these assets. This is the strategy that has come to be known, unhelpfully, as quantitative easing.

Another set of options involves trying to change expectations about future Fed policy. Right now, investors believe that the economy will eventually recover enough for the Fed to start raising rates again. Such expectations about future Fed plans, in turn, can have an important impact on the economy right now. In particular, beliefs about how long the Fed will wait before raising rates can have a major impact on expectations of future inflation. At the moment, investors assume that the Fed will raise rates enough to keep inflation from rising much above 2 percent. If the Fed were to raise its target for inflation — and if investors believed in the new target — expected inflation over the medium term, say the next 10 years, would be higher. Many economists, ranging from the chief economist of the International Monetary Fund to one of Mitt Romney’s top economic advisers, have argued, as I have, that higher expected inflation would aid an economy up against the zero lower bound, because it would help persuade investors and businesses alike that sitting on cash is a bad idea. Bernanke endorsed the idea in his “Paralysis” paper, suggesting that the Bank of Japan declare “a target in the 3-to-4-percent range for inflation, to be maintained for a number of years.”

So which of these steps has the Fed taken lately? Well, it has bought more than $2 trillion worth of long-term government debt and bonds of government-backed housing agencies. That sounds like a lot, but it’s much less than most analysts think necessary to jump-start economic recovery. The Fed has also tried to influence market expectations about future policy, but only for the fairly near term, declaring that it doesn’t expect to raise short-term rates until late 2014. What’s more, Bernanke has ruled out more ambitious policies. In 2010, for example, he dismissed the notion of a higher inflation target for the United States, arguing that it would undermine confidence and the Fed’s “hard-won inflation credibility.”

In short, Chairman Bernanke’s Fed has been much more passive than Professor Bernanke’s writings would have led us to expect.

Can the Fed Do No More?

Some economists and Fed officials believe that the Fed has already done all it can or should — that, in particular, high unemployment is structural, that it can’t be brought down simply by getting people to increase spending. They also warn that any further efforts by the Fed to boost the economy would simply drive up inflation instead. This is, however, a minority view both among economists and at the Fed.

Most stories about structural unemployment stress a perceived mismatch between the work force and employment opportunities: workers, so the story goes, either have the wrong skills or are in the wrong place. But as Bernanke pointed out in a recent speech, employment looks bad across the board: “The fact that labor demand appears weak in most industries and locations is suggestive of a general shortfall of aggregate demand rather than a worsening mismatch of skills and jobs.” As a result, he declared, the data “do not support the view that structural factors are a major cause of the increase in unemployment during the most recent recession.”