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...

Price-level determination requires co-ordination of monetary and fiscal policy to ensure a unique rational expectations equilibrium (REE). This paper derives a number of implications for simple interest rate rules resulting from various fiscal strategies. We show that fiscal choices under either...

In the crises of the past fifteen years, central bankers have become big public players in a drama that affects all our lives, involving financial market crashes, public health threats and devastating economic downturns. Having played a lead role in the global financial crisis and the...