("the Fed") targets asset prices to close the output gap. Our model explains several facts, including why the Fed stabilizes … asset price fluctuations driven by financial market shocks ("the Fed put/call"), but destabilizes asset prices in response …). Although the Fed targets asset prices, it "cooperates" with the market to achieve its desired asset price. When the market and …

. The model and estimation allow for jumps at Fed announcements in investor beliefs, providing granular detail on why …

Our current inflation stemmed from a fiscal shock. The Fed is slow to react. Why? Will the Fed's slow reaction spur … more inflation? I write a simple model that encompasses the Fed's mild projections and its slow reaction, and traditional … backward looking. If expectations are forward looking, the Fed is right, and inflation will eventually fade without a period of …

reserves targeting under Fed Chairman Paul Volcker from 1979-82. Finally, I discuss the relationship between the federal funds …