macroeconomic and financial indicators such as industrial production, inflation, stock market index, foreign exchange rates and … inflation, supporting the evidence of the short-run impact of confidence indexes on these variables. …

We discuss the timing and strength of the Fed's reaction to the recent inflation surge within an estimated … macroeconomic model where long-run inflation expectations are heterogeneous and can lose their anchoring to the target. The … resulting inflation scare worsens the real cost of disinflation. We derive a closed-form solution that retains the entire time …