The economics of money, banking, and financial markets

Inside the Fed  Ben Bernanke’s Advocacy of Inflation Targeting  383

Global  The European Central Bank’s Monetary Policy Strategy  383

Lessons for Monetary Policy Strategy from the Global Financial Crisis .......................384

Implications for Inflation Targeting .................................................................................... 385

Should Central Banks Try to Stop Asset-Price Bubbles? ...................................................386

Two Types of Asset-Price Bubbles ........................................................................................ 386

The Debate Over Whether Central Banks Should Try to Pop Bubbles ................................. 387

Tactics: Choosing the Policy Instrument ...............................................................................390

Criteria for Choosing the Policy Instrument ....................................................................... 392

Tactics: The Taylor Rule ..............................................................................................................393

Inside the Fed  The Fed’s Use of the Taylor Rule  396

Inside the Fed  Fed  Watchers   396

Summary 397  •  Key Terms 397  •  Questions 398  •  Applied Problems 399  •   

Data Analysis Problems  399   •   Web Exercises  400   •   Web References  401