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We develop simple diagrams that can be used by undergraduates to understand interest rate setting by policy-makers. We combine an inflation target, Fisher equation, policy reaction function and short and long run aggregate supply analysis to give a depiction of the policy problem. We illustrate...
Persistent link: https://www.econbiz.de/10003784924
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Research with Keynesian-style models has emphasized the importance of the output gap for policies aimed at controlling inflation while declaring monetary aggregates largely irrelevant. Critics, however, have argued that these models need to be modified to account for observed money growth and...
Persistent link: https://www.econbiz.de/10003825850
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Central banks have a variety of tools for implementing monetary policy, but the tool that has received the most attention in the literature has been the overnight interest rate. The financial crisis that erupted in the summer of 2007 has refocused attention on other channels of monetary policy,...
Persistent link: https://www.econbiz.de/10003947718
The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification...
Persistent link: https://www.econbiz.de/10009620984
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about the Quantity Theory of Money, but he hesitated to probe too deeply into the political and ideological elements of its … history, perhaps leading him to underestimate their importance for the theory's evolution. -- money ; Quantity theory ; value … theory ; positive economics ; empiricism ; formalism ; bimetallism ; gold standard ; monetarism …
Persistent link: https://www.econbiz.de/10009671724
control is improved substantially. -- Taylor Rules ; Money ; Quantity Theory ; Output Gap Uncertainty ; Monetary Policy Under …
Persistent link: https://www.econbiz.de/10003750554