TY  - JOUR
AU  - Goodfriend,Marvin
AU  - King,Robert
TI  - The Incredible Volcker Disinflation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11562
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11562
L1  - http://www.nber.org/papers/w11562.pdf
N1  - Author contact info:
Marvin Goodfriend
Tepper School of Business
Carnegie Mellon University
5000 Forbes Avenue
Pittsburgh, PA 15213-3890
Tel: 412/268-8459
Fax: 412/268-6830
E-Mail: marvingd@andrew.cmu.edu

Robert King
Department of Economics
Boston University
270 Bay State Road
Boston, MA  02215
Tel: 617/353-5941
E-Mail: rking@bu.edu
M2  - featured in NBER digest on 2005-08-22
AB  - Using a simple modern macroeconomic model, we argue that the real effects of the Volcker disinflation in the early 1980s were mainly due to imperfect credibility, evident in volatility and stubbornness of long-term interest rates. Studying recently released transcripts of the Federal Open Market Committee, we find -- to our surprise -- that Volcker and other FOMC members also regarded long-term interest rates as key indicators of inflation expectations and of their disinflationary policy's credibility. We also consider the interplay of monetary targets, operating procedures, and credibility during the Volcker disinflation.
ER  -