The central theme of this book is that a macroeconomic policymaker's role is to enhance the public's ability to coordinate its information, expectations, and economic activities. We narrow the focus of information coordination to policymaker efforts to minimize public uncertainty about current and future inflation. If policymakers take actions to attain a specific inflation rate – and consistently achieve this target – then the public will learn to incorporate this value as its inflation expectation. At the macroeconomic level, we argue that this added certainty in future inflation aids in the stability of future plans and, ultimately, leads to what we have called IOCS.

The findings are wide ranging. In Part I, starting with Chapter 2, we used basic statistical analysis to illustrate the macroeconomic stability and instability in the United States since 1960. We find that both inflation and output stability (IOCS) coexisted for a significant part of this 41-year period.

In particular, IOCS occurred (roughly speaking) for the periods 1962–9 and 1985–2000, periods that coincided with the longest economic expansions since 1854. Furthermore, because IOCS depends on the coordination of price information, we also examine the ability of the public to make and learn correct inflation forecasts. We find that increasing inflation forecast accuracy coincided with periods of IOCS.

Another issue in Chapter 2 is to illustrate whether key policy indicators share periodic patterns that coincide with periods of IOCS.