around the Volcker disinflation. The subsequent decline in persistence is due to both a more aggressive monetary policy regime and less volatile shocks.

in both a simple analytic model, where news shocks overcome the ``dynamic inconsistencies" documented in Estrella and Fuhrer (2002), and in a model that incorporates many of the real rigidities common to DSGE models. The paper calls for more thoughtful modeling of how information about...