The combination of discretionary montetary policy, labor-market distortions and nominal wage rigidity yields an inflation bias as monetary policy tries to exploit nominal wage contracts to address labor-market distortions. Although an inflation target eliminates this inflation bias, it creates a...

The term “economic interdependence” has come into widespread use during the past decade. The chapter addresses the various meanings of this term, the possible reasons for increased economic interdependence on some of its meanings, and the implications of that increased economic...