Financial Markets and Institutions (2-downloads)

10. The benefits of using Fed discount operations to

prevent bank panics are straightforward. What are

the costs?

11. What are the benefits of using a nominal anchor for

the conduct of monetary policy?

12. Give an example of the time-inconsistency problem

that you experience in your everyday life.

13. What incentives arise for a central bank to fall into the

time-inconsistency trap of pursuing overly expan-

sionary monetary policy?

14. What are the advantages of monetary targeting as a

strategy for the conduct of monetary policy?

15. What is the big if necessary for the success of mon-

etary targeting? Does the experience with monetary

targeting suggest that the big if is a problem?

16. What methods have inflation-targeting central banks

used to increase communication with the public and

increase the transparency of monetary policy making?