Perhaps the FOMC Did What It Said It Did:
An Alternative Interpretation of the Great Inflation

By Sharon Kozicki and P.A. Tinsley
November 2005 
RWP 05-04
Research Division 
Federal Reserve Bank of Kansas City 

Abstract

      This paper uses real-time briefing forecasts prepared for the Federal Open Market Committee (FOMC) to provide estimates of historical changes in the design of US monetary policy an in the implied central bank target for inflation. Empirical results and FOMC transcripts support a neglected interpretation of policy during the Great inflation of the 1970’s.
 

Keywords: Asymmetric information; the Great Inflation; time-varying policy responses.

JEL classification: E3, E5, N1

*Authors’ addresses are Vice President and Economist, Research Department, Federal Reserve Bank of Kansas City, 925 Grand Boulevard, Kansas City, MO, 64198, USA, sharon.kozicki@kc.frb.org; and Visitor, Department of Economics, George Washington University, 3840 Beecher St., NW, Washington, DC 20007, USA, ptinsley@gwu.edu. We are grateful to Normand Bernard and staff of the FOMC Secretariat for access to historical FOMC documents. Views expressed are those of the authors and do not necessarily represent those of the Federal Reserve Bank of Kansas City or the Federal Reserve System.

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