Why is inflation so much lower and at the same time more stable in developed economies in the 1990s, compared with the 1970s? This paper suggests that the United Kingdom, United States and other countries may have escaped from a volatile inflation equilibrium. Our argument builds on the story...

Why is inflation so much lower and at the same time more stable in developed economies in the 1990s, compared with the 1970s? This paper suggests that the United Kingdom, United States and other countries may have escaped from a volatile inflation equilibrium. Our argument builds on the story...

Why has inflation been so stable in developed economies since the early 1990s? In this paper, we answer that the United States and other countries may have escaped from a volatile inflation equilibrium. Our argument builds on the story proposed by Tom Sargent in "The Conquest of American...

Disinflationary episodes are a valuable source of information for economic agents trying to learn about the economy.  This paper is especially interested in how a policymaker can themselves learn by disinflating.  The approach differs from the existing literature, which typically focuses on...

A well-known time-inconsistency problem hinders optimal decision-making when policymakers are constrained in their pesent choices by expectations of future outcomes.  The time-inconsistency problem is caused by differences in the preferences of policymakers who exist at different points in...

Recently, there has been considerable work on stochastic time-varying coefficient models as vehicles for modelling structural change in the macroeconomy with a focus on the estimation of the unobserved paths of random coefficient processes. The dominant estimation methods, in this context, are...

The previous literature on the benefits of price level versus inflation targeting has, with some qualifications, established that price level targeting entails lower price level variance at the expense of higher inflation and output variance. This paper investigates the properties of monetary...

This paper reports results from a survey by the Bank of England in 1995 to assess the extent of price-stickiness in 654 UK companies. In the year before the survey, firms on average reviewed prices monthly but changed them only twice. Time-dependent pricing was far more prevalent than...

In this paper we investigate the properties of monetary regimes that combine price-level and inflation targeting. We look both at an optimal control and at a simple rule characterisation of these regimes. We derive numerical results by modelling the economy as a small-scale open-economy RE model...