An analysis of the sources and costs of unpredictable inflation, finding that the uncertainty stems from a lack of appropriate constraints on the monetary policy process, and that the costs could be sharply reduced by adopting a policy that targets a long-run path for the price level.

An argument that a monetary policy aimed at eliminating long-run inflation would benefit society by removing price distortion, increasing economic growth, adding liquidity to the economy, and reducing uncertainty associated with price-level drift.

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...

Compares two possible explanations of why pay increases continue to be moderate in a vigorous labor market--workers' uncertainty about their jobs and human resource managers' wage-setting behavior--and looks at how each explanation matches the evidence on the timing of inflation and wage changes.

The author, a junior at Bowling Green State University in Ohio, won the Federal Reserve Bank of Cleveland’s first annual undergraduate economics essay competition in 2000. His essay, now reprinted as an Economic Commentary, explores the factors that affected money demand during a period of...

A historical look at the origin and uses of the word inflation, arguing that although the term has become nearly synonymous with "price increase," its original meaning--a rise in the general price level caused by an imbalance between the quantity of money and trade needs--is the definition...

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 examination of how to assess the inflationary effects of current monetary policy, reviewing the behavior of a selected measure of core inflation over the past decade and contrasting this pattern with the inflation expectations of both households and professional forecasters, concluding that...

A review of the theoretical and empirical case for disinflationary economic growth, showing that, contrary to popular wisdom, it is quite possible to have a booming economy without an acceleration in the price level.

Most of us, from the general public to professional economists, use the term inflation pretty loosely. It’s increasingly applied to any rise in prices, and even economists use it interchangeably with a rise in the cost of living. This Commentary explains what inflation is, why it should be...