The concept of resource slack is central to understanding the dynamics between employment, output, and inflation. But what amount of slack is consistent with price stability? To answer this question, economists define baseline values for unemployment and output known as the natural rate of...

The idea of creating a framework for explicit inflation targeting in the U.S. has recently become a topic of considerable discussion. The key question is: Could inflation targeting improve on the U.S. economy's performance? President Anthony Santomero thinks inflation targeting makes sense for...

The subject of our next article, "The Taylor Curve and the Unemployment-Inflation Tradeoff," by Satyajit Chatterjee, is finding an optimal monetary policy menu. In the past, monetary policy options were described in terms of a tradeoff between the unemployment rate and the inflation rate, the...