The inflation of the 1970s was a marked deviation from America's typical peacetime historical pattern as a hard-money country. We should expect America to continue to be a hard-money--low inflation--country in the future, at least in peacetime. The low rate of future inflation that we thus...

This paper explores several issues concerning a possible zero lower bound (ZLB) including its theoretical rationale; the magnitude of effects of low sustained inflation on real interest rates; the validity of analyzing monetary policy in models with no monetary variables; and the dynamic...

This paper provides a broad overview of the potential impact of low inflation (deflation) on U.S. financial markets and institutions. It is argued that the contemporary experience of Japan and the historical experience of the United States in the 1920s and 1930s offer only limited insights into...

The idea of creating a framework for explicit inflation targeting in the U.S. has recently become a topic of considerable discussion. The key question is: Could inflation targeting improve on the U.S. economy's performance? President Anthony Santomero thinks inflation targeting makes sense for...

The subject of our next article, "The Taylor Curve and the Unemployment-Inflation Tradeoff," by Satyajit Chatterjee, is finding an optimal monetary policy menu. In the past, monetary policy options were described in terms of a tradeoff between the unemployment rate and the inflation rate, the...

The literature appears to have reached a consensus that financial globalization has had a "disciplining effect" on monetary policy, as it has reduced the returns from--and hence the temptation for--using monetary policy to stabilize output. As a result, monetary policy over recent years has...

A central tenet of inflation targeting is that establishing and maintaining well-anchored inflation expectations are essential. In this paper, we reexamine the role of key elements of the inflation targeting framework towards this end, in the context of an economy where economic agents have an...

This paper introduces a form of boundedly-rational expectations into an otherwise standard New-Keynesian Phillips curve. The representative agent's forecast rule is optimal (in the sense of minimizing mean squared forecast errors), conditional on a perceived law of motion for inflation and...