Viewed from the present day, the 1970s might seem like a dark period in the history of central banking. Belief in the Phillips curve trade-off between inflation and employment had led to monetary policy being used to try to influence the real economy, with stagflation as the result. Kydland and Prescott contributed two seminal articles to the criticism of this approach, for which they have now been recognised with the prize in honour of Alfred Nobel awarded by Sweden's central bank. Their work