01816cas a2200253 a 4500 AALejournalIMF002839 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451844177 1018-5941 BD-DhAAL BD-DhAAL Bayoumi, Tamim. Monetary Magic? : How the Fed Improved the Flexibility of the U.S. Economy / Tamim Bayoumi, Silvia Sgherri. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Extending recent theoretical contributions on sources of inflation inertia, we argue that monetary uncertainty accounts for sluggish expectations adjustment to nominal disturbances. Estimating a model in which rational individuals learn over time about shifts in U.S. monetary policy and the Phillips curve, we find strong evidence that this link exists. These results bring into question the standard approach for evaluating monetary rules by assuming unchanged private sector responses, help clarify the role of monetary stability in reducing output variability in the United States and elsewhere, and tell a subtle and dynamic story of the interaction between monetary policy and the supply side of the economy. Mode of access: Internet Sgherri, Silvia. IMF Working Papers; Working Paper ; No. 2004/024 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/024/001.2004.issue-024-en.xml IMF e-Library