Monetary Policy

  1. The Goals of Monetary Policy
    1. Primary Objectives
      1. Price Stability
        1. Definition of Price Stability
          1. Optimal Inflation Rates
            1. Costs of High Inflation
              1. Shoe Leather Costs
                1. Tax Distortions
                  1. Uncertainty and Planning Difficulties
                  2. Costs of Deflation
                    1. Debt Deflation
                      1. Liquidity Traps
                        1. Economic Stagnation
                        2. Inflation Measurement
                          1. Consumer Price Index (CPI)
                            1. Producer Price Index (PPI)
                              1. Core Inflation
                                1. Personal Consumption Expenditures (PCE)
                                  1. GDP Deflator
                                2. Maximum Sustainable Employment
                                  1. Definition and Measurement of Employment
                                    1. Labor Force Participation Rate
                                      1. Employment-to-Population Ratio
                                        1. Unemployment Rate
                                        2. Types of Unemployment
                                          1. Frictional Unemployment
                                            1. Structural Unemployment
                                              1. Cyclical Unemployment
                                              2. Natural Rate of Unemployment
                                                1. NAIRU (Non-Accelerating Inflation Rate of Unemployment)
                                                  1. Factors Affecting Natural Rate
                                                  2. Output Gap
                                                    1. Potential vs. Actual Output
                                                      1. Measurement Challenges
                                                  3. Secondary Objectives
                                                    1. Moderate Long-Term Interest Rates
                                                      1. Importance for Investment and Growth
                                                        1. Real vs. Nominal Interest Rates
                                                        2. Financial System Stability
                                                          1. Preventing Financial Crises
                                                            1. Systemic Risk Monitoring
                                                              1. Macroprudential Policy Tools
                                                              2. Economic Growth
                                                                1. Supporting Sustainable Growth
                                                                  1. Balancing Growth and Stability
                                                                    1. Long-Run Growth Determinants
                                                                    2. Exchange Rate Stability
                                                                      1. Competitiveness Considerations
                                                                        1. Balance of Payments Effects
                                                                      2. Inherent Trade-offs
                                                                        1. The Phillips Curve
                                                                          1. Original Phillips Curve
                                                                            1. Short-Run Phillips Curve
                                                                              1. Long-Run Phillips Curve
                                                                                1. Expectations-Augmented Phillips Curve
                                                                                  1. New Keynesian Phillips Curve
                                                                                  2. Sacrifice Ratio
                                                                                    1. Definition and Calculation
                                                                                      1. Historical Examples
                                                                                      2. Policy Dilemmas and Conflicts
                                                                                        1. Short-Term vs. Long-Term Objectives
                                                                                          1. Domestic vs. International Considerations

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                                                                                      1. Introduction to Monetary Policy

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                                                                                      3. The Structure and Function of Central Banks