Essay about Money and Banking Week 9 Assignment

Submitted By vhuan8891
Words: 476
Pages: 2

University of Chicago
Booth School of Business
Kroszner / Bus 33401 / Money & Banking
Week 9 Assignment
Written Assignment:
The Minutes of the most recent Federal Open Market Committee (FOMC) were published on
Wednesday and showed a disagreement about whether the Fed has set its inflation goal too low:
“One participant suggested that…the Committee should discuss the possibility of increasing its longer-run inflation objective. This participant and a few others thought such a discussion could be useful but emphasized that any decision to change the Committee’s longer-run goals and policy strategy should not be made lightly. One of these participants noted, in particular, that a decision to raise the Committee’s longer-run inflation objective might work against the achievement of maximum employment and price stability because such a change could undermine the Committee’s credibility and, in addition, lead to adverse changes in inflation dynamics that could pose significant challenges for policy-makers” (pp. 7-8).
The appropriate level of the inflation goal is a lively topic around the FOMC table and among leading economists. I have attached short excerpts from recent articles by economists taking both sides of the debate. You have been asked by Janet Yellen to make a presentation to the
FOMC at its June meeting on the costs and benefits of moving from a 2 percent inflation goal to a 4 percent inflation goal and to make a recommendation of whether to make the change. In addition to the attached articles, you should also draw on Bernanke’s “Deflation” speech and ppl
562-69 of Mishkin’s Chapter 23 to be able to put this debate in the broader contexts of costs/benefits of inflation and deflation. Your memo should be a maximum of 500 words. As usual, you should feel free to discuss with your…