Monetary policy analysis: An undergraduate toolkit

Arbeitspapier

We develop simple diagrams that can be used by undergraduates to understand interest rate setting by policy-makers. We combine an inflation target, Fisher equation, policy reaction function and short and long run aggregate supply analysis to give a depiction of the policy problem. We illustrate the appropriate response by the policy maker to each of a positive shock to demand, a negative supply shock and dislodged inflation expectations. We also illustrate the problems of a zero bound for policy rates within this framework and consider the role of an interest rate rule in offsetting money market perturbations. Some key readings are introduced.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Department of Economics Discussion Paper ; No. 08,15

Classification and Topics

• Classification: Wirtschaft ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Monetary Policy ; Central Banks and Their Policies
• Subject: interest rate setting ; monetary policy ; zero-bound ; money markets ; Geldpolitik ; Zinspolitik ; Inflation Targeting ; Quantitätstheorie ; Schock ; Zero Bond ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chadha, Jagjit S.
• Event: Veröffentlichung
• (who): University of Kent, Department of Economics
• (where): Canterbury
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/50607
• Last update: 10.03.2025, 11:44 AM CET