expected inflation. The inability of the Fed to maintain a credible commitment to low interest rates in the face of increased … government spending and rising inflation led to the Fed-Treasury Accord of March 1951. Following the Accord, the external …

policy returns to normal. The first regime is a return to the high and volatile inflation rate of the 1970s. The second … regime, the one that most Federal Reserve officials and business economists expect, is a return to the credible low inflation … inflation, the policy rate and the 10-year bond rate. These models are used to forecast the U.S. economy from 2008 through 2013 …

of inflation targeting in 1992 or central bank independence in 1997), we instead take a longer perspective, which … alter the monetary base; and the adherence by policymakers in the 1960s and 1970s to nonmonetary views of the inflation …