This paper, authored by Timothy Cogley and Thomas J. Sargent, uses a nonlinear stochastic model to analyze the dynamics of inflation and unemployment in the United States after World War II. The model is a vector autoregression with coefficients that follow random walks, reflecting the evolving views of the monetary authority about the Phillips curve and the natural rate of unemployment. The authors focus on the evolution of the law of motion for inflation, using a Bayesian framework to summarize the data. They estimate the model using a Gibbs sampler and rejection sampling to ensure stability conditions are met. The paper highlights three key features: core inflation and the natural rate of unemployment, the persistence and predictability of inflation, and the evolution of monetary policy parameters. The results show that core inflation and the natural rate of unemployment rose and fell together, with core inflation peaking in the late 1970s and the natural rate of unemployment peaking in 1980. Inflation became more persistent and variable in the 1970s but less so in the 1980s and 1990s. The paper also finds that short-term uncertainty about inflation decreased significantly by 2000, while uncertainty about unemployment fluctuated until the early 1980s and then declined steadily.This paper, authored by Timothy Cogley and Thomas J. Sargent, uses a nonlinear stochastic model to analyze the dynamics of inflation and unemployment in the United States after World War II. The model is a vector autoregression with coefficients that follow random walks, reflecting the evolving views of the monetary authority about the Phillips curve and the natural rate of unemployment. The authors focus on the evolution of the law of motion for inflation, using a Bayesian framework to summarize the data. They estimate the model using a Gibbs sampler and rejection sampling to ensure stability conditions are met. The paper highlights three key features: core inflation and the natural rate of unemployment, the persistence and predictability of inflation, and the evolution of monetary policy parameters. The results show that core inflation and the natural rate of unemployment rose and fell together, with core inflation peaking in the late 1970s and the natural rate of unemployment peaking in 1980. Inflation became more persistent and variable in the 1970s but less so in the 1980s and 1990s. The paper also finds that short-term uncertainty about inflation decreased significantly by 2000, while uncertainty about unemployment fluctuated until the early 1980s and then declined steadily.