Economics (6th Edition)
Economics (6th Edition)
6th Edition
ISBN: 9780134105840
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 26, Problem 26.5.6PA

Subpart (a):

To determine

The changes in the federal funds rate by Taylor rule.

Subpart (b):

To determine

The changes in the federal funds rate by Taylor rule.

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Briefly describe the main policy tools that Fed use in conducting its monetary policy?
In the video on "Fed Transparency", economist Diane Swonk maintains that greater Fed transparency will likely: a. Eliminate all ambiguity concerning Fed announcements b. Only lead to more confusion which will damage financial markets c. Allow the Fed chairman to express his own views while excluding the FOMC's consensus views d. None of these answers is correct
Article Summary In a September 2013 speech to the Independent Bankers Association of Texas, Federal Reserve Bank of Dallas president Richard Fisher stated that the Fed's credibility was harmed when it announced the previous week that it would continue its large bond purchasing program. In June, Fed Chairman Ben Bernanke had stated that that the program could begin to be cut back later in the year, and several other Fed officials expressed being open to the announced timing of this policy. Bernanke's change in his announced timeline of the Fed's intentions regarding the bond purchasing program brought criticism that the Fed had misled investors. In his speech, Fisher stated "I disagreed with the decision of the committee and argued against it. Doing nothing at this meeting would increase uncertainty about the future conduct of policy and call the credibility of our communications into question. I believe that is exactly what has occurred, though I take no…
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