This paper presents empirical evidence on the hypothesis that aggregate price disturbances cause or worsen financial distress. We construct two annual indexes of financial conditions for the United States covering 1790-1997, and estimate the effect of aggregate price shocks on each index using a...

The U.S. economy appears to have experienced a pronounced shift toward higher productivity over the last five years or so. We wish to understand the implications of such shifts for the structure of optimal monetary policy rules in simple dynamic economies. Accordingly, we begin with a standard...

In this paper, we evaluate the accuracy of the U.S. Treasury Department forecasts of real growth and inflation from 1976 to 1990 for the Group of Seven (G-7) economies. The accuracy of these forecasts is measured against the standard of actual real world growth and inflation as subsequently...

Common shocks, similarities in central bank reaction functions, and international trade potentially produce common components in international inflation rates. This paper characterizes such links in international inflation rates with a dynamic latent factor model that decomposes inflation for 65...

An estimation of a price index that is immune to some of the weighting biases that can hinder the use of the Consumer Price Index as a reliable measure of inflation.

Deregulation of electricity generation will offer consumers many advantages, including dramatically lower energy costs. From a macroeconomic viewpoint, electricity purchases are interesting because they are a major component of consumers’ budgets (and thus of the CPI) and a large factor of...

An examination of the impact of inflation and unemployment on poverty, using a poverty rate based on goods and services consumed, rather than on income. The findings suggest that inflation may harm the poor more than was previously thought.

At a time when past rules of thumb seem inadequate, the author briefly reviews the connection between money and prices.