shortfalls in inflation and output relative to exogenous trends, and the policy rate is kept at the ELB until the joint shortfall … is made up. Bernanke's second proposal adds only the cumulative inflation shortfall since the beginning of an ELB episode … directly to an otherwise standard Taylor rule. This cumulative shortfall in inflation from the 2 percent objective can be …

The pickup in the U.S. inflation rate to its highest rates in forty years has led to renewed attention being given to … the Great Inflation of the 1970s. This paper asks with regard to the Great Inflation: “How did it happen?” The answer … guided by a faulty doctrine—a nonmonetary view of inflation that perceived the concerted restraint of aggregate demand as …

This paper documents two facts about countries with floating exchange rates where monetary policy controls inflation … horizon. Second, the real exchange rate is virtually uncorrelated with future inflation rates both in the short run and in the …

We consider three ways that a monetary policy framework may employ a range for inflation outcomes: (1) ranges that … acknowledge uncertainty about inflation outcomes (uncertainty ranges), (2) ranges that define the scope for intentional deviations … of inflation from its target (operational ranges), and (3) ranges over which monetary policy will not react to inflation …

price level. The analysis compares the properties of optimal policy in regimes ranging from pure inflation targeting (IT …), to a form of weighted-average inflation targeting (WAIT), to pure price level targeting (PLT). Strategies such as WAIT …