There are two views of the long festering economic malaise that has hit the world – the view that monetary policy has done too little (read Sumner – I would put proponents of fiscal policy in the same camp) and the view that the world is re-adjusting to a structural shock and so has to undergo some drop in activity (read Kling).
Now, there is currently no way to really separate which view is right and which view is wrong. But there is one thing we can keep in mind – during the Great Depression (which has been put down as a time when monetary policy failed) we saw inflation fall well below the Fed’s implied target … but this time they’ve kept things pretty close to where they were aiming.
On the face of it, this suggests that by keeping price growth constant the central bank has done all it can be expected to do to ensure that inflation does not deviate from the “natural rate” which is determined by underlying factors (think New Keynesian Phillips Curve here where expectations are in fact pinned to the target).
Note that the fact that the price level, future price level, and even the natural rate of unemployment are partially determined by expectations. So this doesn’t mean that the “monetary policy failure” view is wrong (in fact this is the main area where Sumner and Krugman would rightly come out pushing for greater impetus from central banks) – but it does also lead some credence to the idea that there has been a structural mis-alignment around the world, and that there is some cost from adjusting. And if there is indeed an adjustment, the fact that inflation has stayed near target implies that central bank responses have been relatively appropriate – and not the abject failure of no demand side management that is associated with the Great Depression.
The key factor that will tell us where failure is stems from the unemployment rate vs a true structural unemployment rate. Are people unemployed because they have the wrong skills, or are they unemployed due to a lack of demand/an unwillingness to hire given expectations. This I can’t measure – which is why I can’t give an answer regarding global monetary policy failure.