Wednesday, September 21, 2011

Nice Review of Monetary Policy

I liked this review of monetary policy. Although I do not necessarily agree with the following:

Some Republicans want to eliminate the Fed’s dual mandate, so that it can only focus on inflation, not employment; I think that’s a horrible idea, and potentially terrible politics at a time of 9% unemployment. But it’s the kind of idea that belongs in the political arena.
I don't think changing the mandate to focus solely on inflation targeting would necessarily change the Fed's behavior. Under an inflation target the Fed will keep interest rates low to maintain a set inflation rate. Right now we are at that inflation rate.

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