Continuity and Change in the Federal Reserve’s Perspective on Price Stability

David Lopez-Salido, Emily J. Markowitz and Edward Nelson

No 2024-041, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: By examining statements made by the Federal Reserve leadership since the early 1950s, we establish that there has been considerable continuity in policymakers’ perceptions of the benefits of price stability. Policymakers have consistently contended that deviations from price stability give rise to greater cyclical instability, and they have also frequently suggested that potential output is significantly lowered by inflation. The recurrent support for price stability that comes through in these statements implies that it is invalid to take periods in the U.S. record of deviations from price stability as indicating a policymaker belief in the desirability of inflation.

Keywords: Dual mandate; Federal Reserve; Price stability; Costs of inflation; Phillips curve; Superneutrality; Monetary policy objectives (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Pages: 65 p.
Date: 2024-06-14
New Economics Papers: this item is included in nep-cba, nep-his and nep-mon
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2024-41

DOI: 10.17016/FEDS.2024.041

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