result of Volcker's decision was a recession,
new beats by dr dre, and the predictable result of the reces-
sion was a decline in Carter's popularity. Rather than using monetary policy to
help the president who had appointed him,
beats by dre discount, Volcker helped to ensure Carter's de-
feat by Ronald Reagan in the November 1980 election.
The practical importance of time inconsistency is also far from clear. Although
most people are skeptical of central-bank announcements,
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achieve credibility over time by backing up their words with actions. In the 1990s,
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the Fed achieved and maintained a low rate of inflation,
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temptation to take advantage of the short-run tradeoff between inflation and un-
employment. This experience shows that low inflation does not require that the
Fed be committed to a policy rule.
Any attempt to replace discretion with a rule must confront the difficult task
of specifying a precise rule. Despite much research examining the costs and bene-