Publication Date: March 1, 2023

With the inflation rate in the United States and many other countries on the rise for over a year and nearing double digits, the Hoover Institution hosted its 2022 conference on monetary policy. Policy makers, market participants, and academic researchers gathered to discuss the situation. Many agreed that low interest rates and high money growth were inappropriate given the high inflation rate and evidence that the United States has recovered from the deep recession induced by the pandemic and its policy response in 2020. The thoughtful papers and the thorough discussions in this volume of conference proceedings illustrate the debate about the reasons for this mismatch, as well as how to get back on track. They reflect a range of opinions and perspectives, including examination of the fiscal shock resulting from the COVID pandemic and the related borrowing and spending; emphasis on the value of adherence to rules versus discretion in setting Fed policy; lessons from history in the spikes in federal expenditures during times of war (including the pandemic) and in the timing of the Fed’s use of its policy instruments; the role of central banks in the emerging inflation crisis; and strategies toward disinflation.


About the Editors

Michael D. Bordo is a visiting fellow at the Hoover Institution; and a Board of Governors Professor of Economics and director of the Center for Monetary and Financial History at Rutgers University.

John H. Cochrane is a senior fellow at the Hoover Institution, a research associate of the National Bureau of Economic Research, and an adjunct scholar of the Cato Institute.

John B. Taylor is a senior fellow at the Hoover Institution; and the Mary and Robert Raymond Professor of Economics and director of the Introductory Economics Center at Stanford University.

Contributors and Discussants: James Bullard, Michael D. Bordo, Jennifer Burns, Richard H. Clarida, John H. Cochrane, Tyler Goodspeed, George J. Hall, Beth Hammack, Arvind Krishnamurthy, Mickey D. Levy, John Lipsky, Ellen R. McGrattan, Monika Piazzesi, Charles I. Plosser, Joshua Rauh, Randal Quarles, Ricardo Reis, Condoleezza Rice, Thomas J. Sargent, Tom Stephenson, Lawrence H. Summers, John B. Taylor, Christopher J. Waller, Kevin Warsh, Volker Wieland

Table of Contents

Michael D. Bordo, John H. Cochrane, and John B. Taylor

Chapter One: Introductory Remarks
Condoleezza Rice

What Monetary Policy Rules and Strategies Say

Chapter Two: Perspectives on US Monetary Policy
Richard H. Clarida

Chapter Three: A Labor Market View on Inflation
Lawrence H. Summers

Chapter Four: It’s Time to Get Back to Rules-Based Monetary Policy
John B. Taylor

Introductory Remarks: Tom Stephenson

General Discussion: Robert Hall, Terry Anderson, Krishna Guha, Ellen Meade

Fiscal Policy and Other Explanations

Chapter Five: Inflation Past, Present, and Future: Fiscal Shocks, Fed Response, and Fiscal Limits
John H. Cochrane

Chapter Six: How Monetary Policy Got So Far Behind the Curve: The Role of Fiscal Policy
Tyler Goodspeed

Chapter Seven: Current Market Perspectives
Beth Hammack

Introductory Remarks: Charles I. Plosser

General Discussion: Krishna Guha, Mickey D. Levy, James Bullard, Richard H. Clarida, Markos Kounalakis

The Fed’s Delayed Exits from Monetary Ease

Chapter Eight: The Fed’s Monetary Policy Exit Once Again Behind the Curve
Michael D. Bordo and Mickey D. Levy

Discussant Remarks: Jennifer Burns

Introductory Remarks: Kevin Warsh

General Discussion: Ricardo Reis, Richard H. Clarida, James Bullard

Inflation Risks

Chapter Nine: The Burst of High Inflation in 2021–22: How and Why Did We Get Here?
Ricardo Reis

Discussant Remarks: Volker Wieland

Introductory Remarks: Arvind Krishnamurthy

General Discussion: Robert Hall, James Bullard, Patrick Kehoe, Marc Katz, Elena Pastorino

World Wars: Fiscal-Monetary Consequences

Chapter Ten: Financing Big US Federal Expenditures Surges: COVID-19 and Earlier US Wars
George J. Hall and Thomas J. Sargent

Discussant Remarks: Ellen R. McGrattan

Introductory Remarks: John Lipsky

General Discussion: James Bullard, Krishna Guha, Michael D. Bordo, William Nelson, Robert Hall, John H. Cochrane, Patrick Kehoe

Toward a Monetary Policy Strategy

Chapter Eleven: Is the Fed “Behind the Curve”? Two Interpretations
James Bullard

Chapter Twelve: Strategy and Execution in US Monetary Policy 2021–22
Randal Quarles

Chapter Thirteen: Reflections on Monetary Policy in 2021
Christopher J. Waller

Introductory Remarks: Joshua Rauh

General Discussion: David H. Papell, Mickey D. Levy, Tyler Goodspeed, John A. Gunn, John H. Cochrane, Nick Timiraos, Andrew Levin, William Nelson

Chapter Fourteen: Inflation Blues: The Fortieth-Anniversary Revival?
Monika Piazzesi

General Discussion: James Bullard, Krishna Guha, Arvind Krishnamurthy, Axel Merk, David H. Papell

About the Contributors

About the Hoover Institution’s Economic Policy Working Group


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