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Economic Commentary

Uncertain Inflation and Price-Level Rules

Nearly all economists believe that the sole cause of long-run inflation is excessive money growth. In analyzing the economy, it has long been standard practice to employ models in which only unexpected variations in the quantity of money affect real activities and decisions, while anticipated variations affect only the price level. This property is known as neutrality. If inflation comes from money, and money is neutral, there may be little to gain by pursuing policies that reduce inflation.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Hallman, Jeffrey. 1992. “Uncertain Inflation and Price-Level Rules.” Federal Reserve Bank of Cleveland, Economic Commentary 1/15/1992.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International