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Achieving price stability: a 1993 report card

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  • George A. Kahn

Abstract

The primary goal of Federal Reserve monetary policy is to foster maximum sustainable growth in the U.S. economy by achieving price stability over time. Although considerable progress toward price stability has been made since the early 1980s, inflation remains above the level most analysts would associate with price stability. Because price stability is the key contribution the Federal Reserve can make toward maximizing long-run growth and living standards in the United States, it is important for the Federal Reserve to remain vigilant in its efforts to keep inflation in check.> Kahn examines the behavior of inflation over the past year in relation to the Federal Reserve's goal of achieving price stability over time. First, he discusses why price stability is important and how the Federal Reserve has made significant progress toward price stability since the early 1980s. Second, he describes the behavior of inflation in 1993, showing that inflation declined for the year as a whole. Third, he shows that inflation expectations also declined in 1993, suggesting the public believes the inflation outlook has improved. Together, these findings suggest the Federal Reserve made progress in 1993 toward achieving price stability.

Suggested Citation

  • George A. Kahn, 1994. "Achieving price stability: a 1993 report card," Economic Review, Federal Reserve Bank of Kansas City, vol. 79(Q I), pages 5-18.
    • Handle: RePEc:fip:fedker:y:1994:i:qi:p:5-18:n:v.79no.1
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    File URL: https://www.kansascityfed.org/documents/521/1994-Achieving%20Price%20Stability:%20A%201993%20Report%20Card.pdf
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    References listed on IDEAS

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    1. Wynne, Mark A & Sigalla, Fiona D, 1996. "A Survey of Measurement Biases in Price Indexes," Journal of Economic Surveys, Wiley Blackwell, vol. 10(1), pages 55-89, March.
    2. Stanley Fischer, 1984. "The Benefits of Price Stability," Working papers 352, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. George A. Kahn, 1993. "Sluggish job growth: is rising productivity or an anemic recovery to blame?," Economic Review, Federal Reserve Bank of Kansas City, vol. 78(Q III), pages 5-25.
    4. George A. Kahn & Stuart E. Weiner, 1990. "Has the cost of disinflation declined?," Economic Review, Federal Reserve Bank of Kansas City, vol. 75(May), pages 5-24.
    5. Stuart E. Weiner, 1993. "New estimates of the natural rate of unemployment," Economic Review, Federal Reserve Bank of Kansas City, vol. 78(Q IV), pages 53-69.
    6. David E. Lebow & John M. Roberts & David J. Stockton, 1992. "Economic performance under price stability," Working Paper Series / Economic Activity Section 125, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. Todd E. Clark, 1994. "Nominal GDP targeting rules: can they stabilize the economy?," Economic Review, Federal Reserve Bank of Kansas City, vol. 79(Q III), pages 11-25.
    2. George A. Kahn, 1995. "Progress toward price stability: a report card for 1994," Economic Review, Federal Reserve Bank of Kansas City, vol. 80(Q I), pages 5-18.

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