ECO 205 Lecture Notes - Lecture 16: Federal Funds Rate, Deflation, Inflation Targeting
Document Summary
Chapter 16: the conduct of monetary policy: strategy and tactics. This chapter examines the goals of monetary policy and then considers one of the most important strategies for the conduct of monetary policy, inflation targeting. Define and recognize the importance of a nominal anchor. Identify the six potential goals that monetary policy makers may pursue. Summarize the distinctions between hierarchical and dual mandates. Compare and contrast the advantages and disadvantages of inflation targeting. Identify the key changes made over time to the federal reserve monetary policy strategy. List the four lessons learned from the global financial crisis and discuss what they mean to inflation targeting. Summarize the arguments for and against central bank policy response to asset-price bubbles. Describe and assess the four criteria for choosing a policy instrument. Interpret and assess the performance of the taylor rule as a hypothetical policy instrument for setting the federal funds rate. The price stability goal and the nominal anchor.
