The Taylor rule in question 19 is thought to be a reasonably good description of policy behavior in the United States in the absence of unusual financial market conditions or deflationary worries. Taking into account what you know about the policy goals of the ECB and that the average economic growth rate tends to be lower in Europe than in the United States, how would you amend the Taylor rule to better approximate policymaking behavior by the ECB?
Answer to relevant QuestionsGo to the Web site of the Federal Reserve Board at www.federalreserve.gov and find the section describing monetary policy tools. Which unconventional tools employed during the financial crisis of 2007-2009 has the Fed ...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. Assess the impact of targeted asset purchases by plotting since 2003 on a monthly basis the Federal Reserve’s holdings of mortgage-backed securities (FRED code: MBST) and (on the right scale) the average yield on 30-year ...Explain why a consensus has developed that countries should either allow their exchange rates to float freely or adopt a hard peg as an exchange-rate regime? Investors became nervous just before the 2002 Brazilian presidential election. As a result, the risk premium on Brazilian government debt increased dramatically and Brazil’s currency depreciated significantly. (a) How ...
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