I believe that the Fed should keep nominal expenditures--total final sales of domestic product--on a slow steady growth path. I prefer a 3% growth path. With a 3% trend growth rate in productive capacity, that should result in a stable price level on average. However, the Fed has preferred an inflation rate of close to 2%, which implies a 5% growth rate of nominal expenditure. How have they performed?
Take a closer look at the period of 1998 to 2006.
During the period when Beckworth, White, and Taylor claim that interest rates were too low, nominal expenditures were well below the 5% growth path and didn't get back to that growth path until 2006. Of course, the Fed didn't really commit to maintaining a 5% growth path of nominal expenditures, or anything too specific. They appeared to be aiming at increasing the CPI at a 2% annual rate from its current level, where ever that might be. Still, if the Fed was trying to keep nominal expenditure on a 5% growth path, a more rapid expansion of the quantity of money would have been appropriate in 2003.