Outline and compare the ways in which the Federal Reserve and the ECB added to or adjusted their monetary policy tools in response to the financial crisis of 2007-2009 and subsequent financial crisis in the euro area.
Answer to relevant QuestionsThe central bank of a country facing economic and financial market difficulties asks for your advice. The bank hit the zero bound with its policy interest rate but it wasn’t enough to stabilize the economy. Drawing on the ...Inflation is expected to rise when the Taylor Rule persistently and significantly exceeds the federal funds rate. Conversely, inflation is expected to decline when the federal funds rate exceeds the rule. Using the same ...Explain why a central bank is usually more effective at holding the value of its domestic currency at an artificially low level for a sustained period than at an artificially high level.China’s stock of foreign-exchange reserves has risen more than 20 times since 2000, and approached $3.5 trillion in the spring of 2013. Do you think that pace of reserve accumulation is likely to continue? Why or why not?Panama, Ecuador, and El Salvador began using the U.S. dollar as their domestic currency in 1904, 2000, and 2001, respectively. How do you expect their inflation rates to compare with U.S. inflation? Plot since 1960 the ...
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