Core Macroeconomics, Hilary Term 2014

Week 7: Monetary policy

This week we focus on


C&S Ch. 5

Romer Ch. 10 has some useful, understandable material.

R. Clarida, J. Gali, and Mark Gertler, "The Science of Monetary Policy: A New Keynesian Perspective", Journal of Economic Literature 37 (December 1999), pp. 1661-1707.

Rudebusch, G. and J. Williams, "Revealing the Secrets of the Temple: The Value of Publishing Interest Rate Projections," Federal Reserve Bank of San Francisco working paper 2006-31.

Gaspar, V., F. Smets, and D. Vestin, "Is Time Ripe for Price Level Path Stability?" European Central Bank working paper no. 818 (Oct. 2007).

S. Ambler, "Price-level Targeting and Stabilisation Policy: A Survey," Journal of Economic Surveys 23(5) (2009), pp. 974-997.

B. Bernanke and F. Mishkin, "Inflation Targeting: A New Framework for Monetary Policy?"́ Journal of Economic Perspectives , 1997, pp 97-116.

The Fall 2007 issue of the Journal of Economic Perspectives has a four-article symposium on monetary policy.


Please write an essay answering one of the following questions.

"If expectations are rational, it is imperative that central banks indicate how long they expect any changes they make to interest rates to last.í Explain and discuss this statement." (2009 exam)

"In the light of macroeconomic developments over the past two years, it is time to move from ináation targeting to price level targeting." Explain and discuss. (2010 exam)

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