An analysis of the sources and costs of unpredictable inflation, finding that the uncertainty stems from a lack of appropriate constraints on the monetary policy process, and that the costs could be sharply reduced by adopting a policy that targets a long-run path for the price level.

A look at the U.S. Census Bureau and the Federal Reserve Board indexes of capacity utilization, with an explanation of the indexes' construction, advantages, and shortcomings; conclusion of June 15 issue.

An examination of the usefulness of two measures of capacity utilization in predicting price pressures and future investment: one measure attempts to represent the maximum physical output a plant can produce, and one is based on changes in production costs as output increases; article concludes...

To accurately forecast the future rate of inflation, it is imperative to account for inflation’s underlying trend. This is especially important for medium- to long-run forecasts. In this Commentary I demonstrate a simple but powerful technique for incorporating this trend into standard...

Economists have been arguing about the connection between unemployment and infl ation for decades. Critics claim that the connection is unreliable and leads policymakers astray, while others argue that the relationship is useful for forecasting. We examine the more direct connections between...

The Median CPI is well-known as an accurate predictor of future infl ation. But it’s just one of many possible trimmed-mean inflation measures. Recent research compares these types of measures to see which tracks future inflation best. Not only does the Median CPI outperform other trims in...

Should the unanticipated slowing of inflation that has occurred since early 2012 raise doubts about the reliability of inflation forecasts? We answer this question by conducting a few exercises with a common macroeconomic forecasting model. Our results indicate that even though inflation turned...