Description
Only uses the material I attach below, no other outside source.
5-6 pages double-spaced text, not counting citations, graphs and tables. You can draw graph if you want. Grammar and spelling are counts. When you use something from the material I provide below, cite it as an Economics paper.
I do not expect you to use or cite any material beyond the readings I attach below. When you use something from the class notes, you need not provide any kind of citation. When you use a reading from the course pack or something you find for yourself, you must cite it properly.
The essay question is below:
II) Back in 2008, two Federal Reserve economists published an article (in your course pack) titled "What is the Optimal Inflation Rate?" In it, they discussed what level the Fed should choose for an inflation target. They said that a "standard" model suggested a target inflation rate of 0.7-1.4% (in the PCE index) would be good, and that a target of 2% would also be good; 2% would "place only limited constraints on monetary policy in stabilizing the economy." In fact, back in 2008, nearly all economists believed 2% was a good inflation target.
Nowadays, in 2017, many economists argue that the Fed's inflation target should be higher than 2%. For example, Olivier Blanchard, formerly the chief economist at the International Monetary Fund, recommends an inflation target of 4%.
Why are economists recommending an inflation target of 4% now, if they recommended an inflation target of2% back in 2008? Did something, or some things, happen in the meantime that changed economists' minds? In your paper, make sure to cover all of the reasons economists give for adopting a higher inflation target.
Writing rule:
The introductory paragraph must state your conclusions, e.g. your answers to the specific
questions I posed with respect to the topic you chose. The concluding paragraph should
restate your conclusions but not in exactly the same words.
Avoid fancy, big, odd words
Always ask: is there a shorter word that means the same thing?
As much as possible, avoid using words you don't use in ordinary conversation.
Know the difference between "its" and "it's," between "who's" and "whose," between
"effect" and "affect."
Look up the difference between "compare with" and "compare to." If you mess this up I
will HATE YOU.
"Relate to," "correlate with." NOT "relate with," "correlate to."
"Reason for" NOT "reason of."
"Research on" or "research about." NOT "research of."
There is no such word as "researches."
Avoid the passive voice.
NO I was bitten by the dog.
YES The dog bit me.
NO Models have been designed
YES Economists have designed models
Avoid unnecessary adjectives and adverbs.
NO little universal consensus has been achieved
YES little consensus has been achieved
oh, wait...that's passive. Better:
economists have not come to a consensus
NO it is very likely
YES it is likely
NO of utmost interest
YES of interest
oh, wait...even better:
interesting
When you quote, you must give page number as well as author and year:
"Dogs bite" (Aaron 1996, 12)
Unformatted Attachment Preview
Explanation & Answer
you are always welcomeplease note the outline is just for studypoollet me know if you need anything to be changed or added
Running Head: ECONOMICS OF MONETARY: INFLATION RATE
1
Economics of Monetary: Inflation Rate
Contents
Introduction ................................................................................................................................................... 1
Reasons why the Optimal Inflation Rate might be low and positive ............. Error! Bookmark not defined.
Reasons for maintaining low inflation ........................................................... Error! Bookmark not defined.
Reasons why inflation should be above zero ................................................. Error! Bookmark not defined.
Measurement error ..................................................................................... Error! Bookmark not defined.
Downwards wage rigidity .......................................................................... Error! Bookmark not defined.
Effects of the Long-Run Inflation Objectives on Macroeconomic Stability . Error! Bookmark not defined.
Empirical Evidence .................................................................................... Error! Bookmark not defined.
Policymaker views ..................................................................................... Error! Bookmark not defined.
Conclusion ..................................................................................................... Error! Bookmark not defined.
References ...................................................................................................... Error! Bookmark not defined.
Introduction
Inflation is defined as the rate which the general level of prices for goods and services is
rising and as a result, the purchasing power of currency if falling. Most policymakers agree that
they should not allow inflation to fall below zero because the costs of deflation are assumed to be
high. However, some policymakers and economists disagree about how much above zero, if any,
central banks should aim to keep inflation. Billi (2007) stated that one reason for keeping
inflation above zero stems from the fact that nominal interest rates cannot fall below zero. When
inflation is low and expected to remain low, investors are willing to accept a low inflation
premium when purchasing nominal debt instruments. This leads to nominal interest rates tending
to be negative.
Running Head: ECONOMICS OF MONETARY: INFLATION RATE
Economics of Monetary: Inflation Rate
Students Name:
Course Title:
Institution:
Professor’s Name:
Date of Submission:
1
ECONOMICS OF MONETARY: INFLATION RATE
2
Contents
Introduction ................................................................................................................................................... 3
Reasons why the Optimal Inflation Rate might be low and positive .........................
Review
Review
