This note develops an econometric model of inflation dynamics to assess recent developments. We find that most of the rapid decline in price pressures achieved in 2023 owes to the normalization of supply chains. With supply-chain disruptions now largely resolved, future progress toward...

We use simulations of the Federal Reserve's FRB/US model to examine the efficacy of a number of proposals for reducing the consequences of the zero bound on nominal interest rates. Among the proposals are: a more aggressive monetary policy; promises to make up any shortfall in monetary ease...

New Keynesian models with sticky prices and rational expectations have a difficult time explaining why reducing inflation usually requires a recession. An explanation for the costliness of reducing inflation is that inflation expectations are less than perfectly rational. To explore this...