The rise, fall, and stabilization of US inflation between 1969 and 2005 is consistent with a model of shifting policy … sector learning about policymaker type. Using model-implied inflation forecasting rules to extract state variables from the … inflation forecasts in the Survey of Professional Forecasters, we provide evidence that policy regimes without commitment …

This paper analyzes the dramatic rise in U.S. inflation since 2020, which we decompose into a rise in core inflation as … measured by the weighted median inflation rate and deviations of headline inflation from core. We explain the rise in core with …-through into core from past shocks to headline inflation. The headline shocks themselves are explained largely by increases in …

Using a small empirical model of inflation, output, and money estimated on U.S. data, we compare the relative … performance of monetary targeting and inflation targeting. The results show that monetary targeting would be quite inefficient …, with both higher inflation and output variability. This is true even with a deterministic money demand formulation. In this …

We study the implications of the Fed's new policy framework of average inflation targeting (AIT) and its ambiguous … communication. The central bank has the incentive to deviate from its announced AIT and implement inflation targeting ex post to … inflation as a result of time inconsistency. First, it is optimal for the central bank to announce different horizons depending …

The paper begins by tracing the origins of the case for inflation targeting in postwar US monetary history. It … describes five aspects of inflation targeting practiced implicitly by the Greenspan Fed. It argues that (1) low long run … inflation should be an explicit priority for monetary policy, (2) as a practical matter it is not desirable for the Fed to vary …

banks set interest rate targets, and do not even pretend to control money supplies. How is inflation determined under an …We finally have a complete theory of inflation under interest rate targets, that mirrors the long-run neutrality and … frictionless limit of monetary theory: Inflation can be stable and determinate under interest rate targets, including a k percent …

public finances. We show that when the ECB misses its inflation target this has large heterogeneous fiscal consequences for … missing their inflation targets. They are also sizeable …

inflation (with base drift in the price level) and price-level stability (without such base drift) are compared, and a suitable … loss function (corresponding to flexible inflation targeting) is discussed, including the index and level for the inflation … price stability. The benefits of credibility (private inflation expectations coinciding with the inflation target) are …

This paper considers the problem of optimal long run monetary policy. It shows that optimal inflation policy involves … trading off two quite different considerations. First, increases in the rate of inflation tax the holding of many balances … of inflation raise capital intensity. As long as the economy has a capital stock short of the golden rule level …