What is a time consistency problem, in general. What is the time inconsistency problem with inflation policy? What is the Fed’s Loss function? The model we used shows that inflation will be higher than would be optimal - for both the public and the Fed; this means that it is a model of “inflationary bias.” How can the effects of reputation eliminate this bias. (Think about the diner/waiter game played one time only, versus being played over and over again on an on-going basis.