Inflation targeting has worked so well because it leads policymakers to debate, decide on, and communicate the inflation objective. In practice, this process has led the public to believe that the central bank has a long-term inflation objective. Inflation targeting has been successful, then,...

Federal Reserve policymakers began reporting their economic forecasts to Congress in 1979. These forecasts are important because they indicate what the Federal Open Market Committee members think will be the likely consequence of their policies. The Fed reports both the range (high and low) of...

Gavin and Kydland (1999) calculated the cyclical properties of money and prices for the periods before and after the October 1979 policy change. In this article, we extend that work by adding four more years of data and including a study of nominal interest rates and inflation. The adoption of a...

If the central bank follows an interest rate rule, then inflation is likely to be persistence, even when prices are fully flexible. Any shock, whether persistent or not, may lead to inflation persistence. In equilibrium, the dynamics of inflation are determined by the evolution of the spread...

Is there a common model inherent in macroeconomic data? Macroeconomic theory suggests that market economies of various nations should share many similar dynamic patterns; as a result, individual-country empirical models, for a wide variety of countries often include the same variables. Yet,...

The classical gold standard has long been associated with long-run price stability. But short-run price variability led critics of the gold standard to propose reforms that look much like modern versions of price-path targeting. This paper uses a dynamic stochastic general equilibrium model to...

A comparison of the performance of forecasts by economists (the Livingston survey), households (the Michigan Survey of Consumer Finances), and a time series model (ARIMA).

An examination of the short- and long-term implications of an inflation policy on real output, using a method that allows structural interpretation of a simple VAR applied to a macroeconomic system that includes real output and inflation.

A review of monetary targeting in recent years and a discussion of issues raised by Federal Reserve Chairman Paul Volcker's February 1984 report to Congress on the System's objectives for the year.

A discussion of Federal Reserve monetary targets and of their relationship to the turnover of money (velocity) in the economy, with an examination of historical trends from 1880 to 1982, and comment on the effect of interest-bearing checking accounts on velocity.