LORENZETTI, Ambrogio -- Allegory of the Good Government (detail) -- 1338-40 -- Siena
As part of the series of lectures my colleagues and I give to our Master students on Contemporary Economic Challenges, I'm talking tomorrow about Monetary Policy.
How do authorities conduct a monetary policy to achieve price stability?
Ensuring economic growth, low unemployment and price stability are the three main objectives
that monetary and fiscal authorities target with the help of macroeconomic theory. Controlling
inflation is nowadays mostly in the hand of independent monetary authorities: their aim is to
allow private agents to engage in economic activities and investments without fear for the
future. This lecture reviews the mechanisms presiding over the determination of inflation (with
a focus on the role of expectations); the new issues that arose following the 2007 Great
Recession (Macro-financial linkages, Zero-lower bound); as well as new toolbox that Central
Banks have developed (Quantitative Easing, Forward Guidance...). A special emphasis will be
placed on the interplay between empirical experience and economic theory.
Goodfriend, Marvin (2007). "How the World Achieved Consensus on Monetary Policy." Journal
of Economic Perspectives 21(4): 47-68.
Chari, V., V., and Patrick J. Kehoe (2006). "Modern Macroeconomics in Practice: How Theory Is
Shaping Policy," Journal of Economic Perspectives 20(4).
Galí, Jordi, and Mark Gertler (2007). "Macroeconomic Modeling for Monetary Policy
Evaluation," Journal of Economic Perspectives 21(4): 25-46.
Woodford, Michael (2010). "Financial Intermediation and Macroeconomic Analysis," Journal of
Economic Perspectives 24(4): 21-44.
The Economist: The Natural Rate of Unemployment August 2017
The Economist: Controlling Interest September 2013
The Economist: A Healthy Dose of Inflation February 2010