Provide arguments for and against the proposition that a central bank should be allowed to set its own objectives.
Answer to relevant QuestionsWhen countries in a common currency area show persistently rising ratios of public debt to GDP, how does it affect the credibility of an inflation-targeting central bank?According to Figure New Zealand in the 1970s and 1980s combined high inflation with relatively little central bank independence. In 1989, New Zealand became the first country to adopt an inflation target. How did this policy ...What are the goals of the ECB? How are its officials held accountable for meeting them? If you were asked to design a new central bank, what two institutional design features of (a) the Federal Reserve System and (b) the ECB would you adopt? Explain your choices. In 2012, the Federal Reserve announced an inflation objective of 2 percent “over the longer run” for the price index of personal consumption expenditures (FRED code: PCEPI). However, many analysts focus on the “core” ...
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