Wednesday, July 11, 2012

Monetary Policy, Money, and Inflation

One of the challenges teaching this course is finding ways to incorporate (and sort through) the wealth of articles that are being published related to money, banking, and financial markets. Here is a nice article by John Williams (President of the FRBSF) discussing the relationship between monetary policy, money, and inflation (see chapter 3). Pay particular attention to the discussion on paying interest on bank reserves and the incentives for banks to lend out excess reserves.

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