Inflation: measurement and policy issues

The author surveys some problems in measuring inflation and examines the likely costs of anticipated and unanticipated inflation as well as the short-run costs of reducing inflation. He looks at the possibility that an inflationary bias may be implicit in the political economy aspects of the inflation problem, assesses the potential costs and benefits of zero inflation as a policy objective, and considers the possible implications of the inflation problem for monetary policy rules and for the independence of central banks.