Few will argue against the view that price stability plays an important role in promoting medium- to long-term economic growth. However, a consensus has yet to be gained as to how we should define price stability in the context of monetary policy operations and a desirable rate of inflation. In...

This paper summarizes the analysis and findings of the Boskin Commission, reviews criticisms, provides responses to criticisms, and summarizes recent changes in the CPI and recent research on price measurement.

Arguments are developed concerning a number of topics including long-run monetary neutrality, superneutrality, the natural-rate hypothesis, the quantity theory of money, the equation of exchange, the Fisher equation, and purchasing power parity. These are basic, fundamental topics that all...

The effects of three different inflationary environments--high inflation, low inflation, and negative inflation--on real output stability are examined by looking at the experiences of Japan and the United States during the last 30 years. I begin by going back to see how things looked from the...

The Bank of Japan has often been viewed as an outlier in combining low inflation with little formal central bank independence. This view has been based mainly on simple correlations between average inflation and measures of central bank independence. When additional factors that might account...

This paper examines methods of controlling the supply shock in the estimation of the Phillips curve and discusses the relationship between the supply shock and inflation inertia. The empirical results clearly show that controlling the supply shock effect, not only for current inflation but also...

Central bankers in the major industrial economies have come close to securing the peace, or in some cases, have secured it in the battle against inflation, hostilities that lasted almost as long as the Cold War. It is important to remember that this battle has been a good fight: both the theory...

A new technique is demonstrated for the simultaneous estimation of potential output and the Phillips curve. In this paper, we define potential output as the non-accelerating inflation level of output (NAILO). The NAILO is not a simple trend of actual output. Instead, it is the critical level of...

This paper strives to answer five questions. First, why do legislators choose to create an independent central bank? Second, why do legislators delegate the conduct of monetary policy to a committee, rather than to a central bank governor? Third, what kinds of factors are crucial in limiting the...

This paper considers the use of trimmed means as monthly indicators of Japanese core inflation. As in Bryan, Cecchetti, and Wiggins (1997) for the United States, and Roger (1997) for New Zealand, we find that trimming the tails of the price change distribution substantially improves...