This paper provides an explanation for the run-up of U.S. inflation in the 1960s and 1970s and the sharp disinflation … by low inflation. However, prolonged episodes of high inflation ending with rapid disinflations can occur when … policymakers underestimate both the natural rate of unemployment and the persistence of inflation in the Phillips curve. I estimate …

A parsimonious model of shifting policy regimes can simultaneously capture expected and actual US inflation during 1969 …. Private sector learning about policymaker type leads to a reputation state variable. We use model inflation forecasting rules … to extract state variables from SPF inflation forecasts. US inflation is tracked by optimal policy without commitment …

Why do some attempts at disinflation lead to substantial reductions in inflation while others do not? We investigate … that a fundamental determinant of success in reducing inflation was the strength of the Federal Reserve's commitment to … disinflation at the start of its attempts. In episodes where its commitment was high, there were significant declines in inflation …