Survey data on household expectations of inflation are routinely used in economic analysis, yet it is not clear how accurately households are able to articulate their expectations in survey interviews. We propose an alternative approach to recovering households' expectations of inflation from...

We propose formal and quantitative measures of the risk that future inflation will be excessively high or low relative to the range preferred by a private sector agent. Unlike alternative measures of risk, our measures are designed to make explicit the dependence of risk measures on the private...

We derive a natural generalization of the Taylor rule that links changes in the interest rate to the balance of the risks implied by the dual objective of sustainable economic growth and price stability. This monetary policy rule reconciles economic models of expected utility maximization with...