Despite a significant decline in the pace of economic growth in the second half of 2000, macroeconomic forecasters underpredicted real GDP growth and overpredicted the unemployment rate by a significant amount, for the fifth consecutive year. On average, real GDP forecasts were about 2...

Central bankers in the United States and abroad must grapple with a broad array of questions about how best to conduct monetary policy. How much should the goal of price stability be emphasized relative to the goal of employment stability? Does central bank independence aid in achieving either...