A familiar old saw about the conduct of monetary policy is that it's like trying to drive a car while looking only in the rearview mirror. The idea is that policymakers are trying to steer a course that will keep the economy close to full employment with low, stable inflation, while their only knowledge of the road ahead is based on data about the past. ; As if this situation weren't challenging enough, the rearview mirror sometimes gives a distorted reflection, in the sense that the data policymakers see at any one point in time are often later revised. This Economic Letter discusses a particular example, the annual revision to the national accounts in July 2005, which included a substantial upward revision to previously benign inflation estimates, and it lays out some ways that policymakers can address the challenge of changing data.
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Article provided by Federal Reserve Bank of San Francisco in its journal FRBSF Economic Letter.
Volume (Year): (2005) Issue (Month): Dec 9 () Pages: Download reference. The following formats are available: HTML,
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Janet L. Yellen, 2006.
"Prospects for the U. S. economy,"
Speech,
Federal Reserve Bank of San Francisco, issue Oct. 9.
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