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Lecture 11: Part II - Coggle Diagram
Lecture 11: Part II
Central Bank Independence
has only inflation objective
graph: 63
cash rate target
Exchange Settlement Accounts (ESA)
Monetary Transmission Mechanism (p.70)
Taylor Rule
: page 75
raise interest rate if
output gap is positive
inflation > target inflation
Inflation
CPI vs PPI
Inflation output trade off
Phillips Curve (page 48)
negative relationship between inflation and unemployment
formula (page 50)
The PC and Shifting Expectations (page 55)
credibility and IE (page 59) - reducing inflation
IE: Inflation Expectation
Costs of inflation
Shoe leather costs/ transactions costs
Noise in the price system
Distortions of tax system
Unexpected redistribution of wealth
Interference with long- run planning
Menu costs