This paper reviews the main issues that supply shocks pose for the conduct of monetary policy. A simple version of the Gordon-Phelps model shows that the necessary condition for actual real GNP to be maintained at its equilibrium level in the wake of a supply shock is for the change innominal...

Backcasting upward bias in price index over long periods of time yields levels of real consumption two or four centuries ago that are implausibly low, raising the possibility that price index bias for important products may have been zero or even negative at some point in the past. This paper...