In this paper we embed the Taylor interest rate rule in a simple macroeconomic model with Calvo contracts. We contrast this with the case in which the interest rate is determined by the conventional LM curve along with a fixed value for the monetary aggregate. We derive conditions under which...

There is now a consensus that economic growth is a dominant determinant of poverty. That is, poverty reduction requires sustained economic growth significantly above the population growth so that per capita income continues to rise. Economic growth raises mean income and reduces the proportion...

This paper examines the empirical outcomes of the policies of nine monetary authorities (eight OECD nations and the Euro zone) so as to infer the strength and stability of the economic relationships behind those policies. Governments, responding to earlier rampant inflation, have in recent...

In setting monetary policy in 1995, the Federal Reserve sought to promote sustainable economic growth and continued progress toward price stability. Toward those ends, the Federal Reserve adjusted the stance of monetary policy three times in 1995. In February, amid signs of increasing...

Careful readers of FOMC communications will note that in addition to talking about actual inflation, the committee often talks about inflation expectations. Sandra Pianalto, the president and chief executive officer of the Federal Reserve Bank of Cleveland, explains the important role that...

The FOMC has two objectives: maximizing sustainable economic growth and maintaining price stability. At times-like the past year-these goals appear to be in conflict. This Commentary outlines some economic theory that suggests that in the long run, the FOMC can achieve its two objectives by...

Observations that the Phillips curve may be deviating from historical norms are important to policymakers because deviations would imply that more or less output has to be sacrificed to achieve a permanent reduction in long-term inflation. But we argue that recent economic shocks and a shift in...

An explanation of P-Star, evaluating its usefulness both as an indicator of potential inflation and as a method of assessing the Federal Reserve's long-term goal of price stability.