Study unveils hidden driver of economic volatility: Central bank discretion

In the last article of his prolific career, the late Marvin Goodfriend, who held the Allan H. Meltzer Professorship of Political Economy at Carnegie Mellon's Tepper School of Business and was a lifelong student of inflation and central bank policy, identified a subtle yet significant factor contributing to fluctuations in inflation and employment rates. This factor is the discretionary decision-making by central banks, combined with economic agents trying to forecast both the central bank's actions and the forecasts of their peers.