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Central banks that engage in inflation targeting usually announce. Explain why transparency is such a fundamental ingredient of inflation targeting.
Why do you think the central bank will follow a monetary policy rule, or engage in discretionary monetary policy?
Suppose an econometric model based on past data predicts a small decrease in domestic investment. What would be Lucas's critique to this model?
Consider two individuals forming expectations about mortgage rates. How would expectations about future mortgage rates change for Mark and Gloria?
What has been the general experience of countries that have adopted inflation targeting? What are the arguments for and against central bank independence?
What benefits does a credible nominal anchor provide? What are the purposes of inflation targeting and how does this monetary policy strategy achieve them?
How does the theory of rational expectations differ from that of adaptive expectations? What are the arguments for and against rules?
Suppose you are a recent college graduate and that you are eager to find a job. Which country's labor market seems more promising to you?
Suppose that a country is rapidly making the transition from an agricultural based economy. How do you think structural unemployment will be affected?
Discuss the effects of the Internet on frictional unemployment. How do you think websites that allow employees to search for job opportunities more efficiently?
Using a graph, analyze the effect of a recession and an increase in day care costs on the real wage and employment.
Do you think that the Taylor rule encourages or avoids demand-pull inflation? Which might be a limitation of Taylor rule with respect to demand-pull inflation?
How does direct finance differ from indirect finance? Which form of finance is most important?
Why are asymmetric information problems particularly challenging in developing countries?
How can asymmetric information problems lead to a bank panic? Why do governments provide safety nets for bank depositors and what are their consequences?
What are the benefits of financial deepening? What do you think the consequences would be for the economy?
Do you think funds were allocated to their most productive use? Comment on the efficiency of such a financial system.
Do you think investors are currently willing to buy bonds issued by the government of Argentina?
Explain why banks might require that much property as collateral in such a financial system. Comment on the consequences of such a system for economic growth.
The Wall Street Journal printed the following on April 14, 2010. How do you think it will affect the overall performance of the financial system?
Explain why this might create more problems than solutions in the financial system of developing countries.
Comment on the effect of financial deepening on a central bank's ability to conduct monetary policy.
How do you think this procedure will solve asymmetric information problems?
How does asymmetric information help us define a financial crisis? Why is a financial crisis likely to lead to a contraction in economic activity?
Why does debt-deflation make financial crises worse? What is a credit spread? Why do credit spreads rise during financial crises?