This paper considers a simple quantitative model of output, interest rate and inflation determination in the United … disturbances, can account for our data nearly as well as an unrestricted VAR. The monetary policy rule that most reduces inflation … high average inflation rate. But even in the case of a constrained-optimal policy, that takes into account some of the …

This paper shows that it is possible to analyze equilibrium inflation determination without any reference to either … become negligible. Inflation in the cashless limit is shown to be a function of the gap between the natural rate' of interest …-rate rule indicating the tightness of monetary policy. Inflation can be completely stabilized, in principle, by adjusting the …

Proposals for 'inflation targeting' as a strategy for monetary policy leave open the important operational question of … how to determine whether current policies are consistent with the long-run inflation target. An interesting possibility is … that the central bank might target current private-sector forecasts of inflation, either those made explicitly by …