Our findings? The data aligns with the model predictions. Major monetary policy regime changes have major effects, so the Forward Guidance Puzzle is perhaps not so puzzling after all. End/

At the end of the day, the question is empirical. We study 4 episodes from the US Great Depression that closely mirror a FGP scenario, using data on long-term yield to approximate the effect of policy announcement about longer duration of the ZLB. 6/

Think of it like a fire: Is it puzzling that a flame grows larger the longer you commit to not extinguishing it? That's essentially the FGP. 5/

This represents a major monetary policy regime change. 4/

The "puzzle" emerges from assuming interest rates are fixed between the announcement today of the future cut, regardless of what happens to output and inflation. 3/

The FGP suggests that future interest rate cuts have bigger effects than current ones. This seems indeed quite puzzling. 2/