The runaway inflation in Bolivia from 1982 to 1985 was different from that in most other countries by not being related to war. In this study, seigniorage is viewed as a residual source of government income and the case of Bolivia is analyzed from the public choice point of view. Three...

It has been widely held that nominal disturbances influence real economic activity by distorting the public's perception of relative prices. Implicit in this hypothesis is the assumption that there is a lag in the public's perception of the aggregate price level. This paper tests this assumption...

The 1970s witnessed a backlash against inflation. However, Japan's prolonged stagnation and the global economy's recent flirtation with deflation have revived the case for low inflation. Low inflation acts as grease in labor markets, helping the process of adjustment and lowering equilibrium...

The Federal Reserve currently pursues both price stability and full employment. Congress is debating whether to make price stability the overriding goal of monetary policy. This paper argues against such a change for several reasons. First, under the current mandate the U.S. has experienced low...

This paper develops a macroeconomic model of the response of interest rates to inflation expectations, with particular attention to the role of tax non-neutralities. Virtually all the well-known results in the theoretical literature hold as special cases of this model. Some suggestive empirical...

This paper investigates the changing probability of a monetary policy response to inflation and employment announcements within the Federal Funds targeting procedure. It is found that employment announcements are significantly linked to Federal Reserve policy actions and the probability of no...