Conducting Monetary Policy: General Readings


Much of the material covered in this Lesson is a review and minor extension of that covered in earlier Lessons and the relevant readings will therefore already have been assigned. The Taylor Rule is new here, however, and a discussion of it can be found on pages 491 and 492 of the Third Edition of N. Gregory Mankiw's intermediate text, Macroeconomics, under the heading Case Study 18-3. Equivalent material will surely be present in other editions of this text and should be easily found by referring to the indexes. Another excellent reading in ending these Lessons is Chapters 18 and 19 of the Sixth Edition of Paul R. Krugman and Mauice Obstfeld, International Economics, Theory and Policy published by Addison Wesley. These chapters are entitled The International Monetary System, 1870-1973 and Macroeconomic Policy and Coordination under Floating Exchange Rates. The material in these two chapters outlines the history of what has happened in the world economy from 1870 to 2002 and gives interpretations of these facts. These interpretations are interesting because some appear inconsistent with the analysis of our series of Lessons. In working through this material you should puzzle over the following questions:

Choose a Topic in the Lesson