The introductory remarks will suggest the possibility that observed high inflation is not optimal. However, some possibilities that it is optimal will be briefly mentioned. One is the possibility that interest rates should be kept high so that the central bank has the ability to help resolve `confidence crises'. This is discussed in the second part of a comment on McCallum.

Chari, Christiano and Eichenbaum, Expectation Traps and Discretion, Journal of Economic Theory, 1998.

Albanesi, Chari and Christiano, Expectation Traps and Monetary Policy, manuscript (more recent version)

Albanesi, Chari and Christiano, How Severe is the Time Consistency Problem in Monetary Policy?, manuscript (the primary objective of this paper pedagogic, to present the tools for analyzing Markov equilibria of monetary models at the level of a second year graduate course for students who want to be specialists in this area.)

Christiano and Fitzgerald, Inflation and Monetary Policy in the 20th Century, Federal Reserve Bank of Chicago Economic Perspectives, 2003, available at  http://www.frbchi.org/pubs-speech/publications/periodicals/ep/welcome.html

Christiano and Gust, The Expectations Trap Hypothesis, Federal Reserve Bank of Chicago Economic Perspectives, Second Quarter, 2000, available at http://www.frbchi.org/pubs-speech/publications/periodicals/ep/welcome.html