How can and should they respond to bubbles

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1. Please debate on the Central Banks' independence (pro and cons based on viable economics theories). And explain briefly how Fed and ECB are structured to maintain a certain level of independence.

2. Please comment on insider trading and asymmetric information in financial markets by addressing concepts like adverse selection and moral hazard problems in both debt and equity markets. And what tools can be advised to solve these problems. I'd like you also comment on the current bankers' pay (salaries + bonus) debate in various countries.

3. Please comment on the following terminology (keep your answers with a max 100 words for each)

a) Time inconsistency problem for monetary policymakers and the role of nominal anchors in dealing with that issue.

b) Options for Central Banks in dealing with asset-price bubbles; how can and should they respond to bubbles?

4. Serkan Bey and his lovely spouse wish to purchase a boat in 8 years when they retire. They are planning to purchase the boat using proceeds from the sale of their property which is currently worth $90,000 and its value is growing at 7 percent a year. The boat is currently worth $200,000 increasing at 5 percent per year. In addition to the value of their property. How much additional money should they deposit at the end of each year in an account paying 9 percent annual interest in order to be able to buy the boat upon retirement?

5. Please read the following article and comment on it based on monetary policy options explained in our textbook. Please argue on how you would evaluate CB policies and performance under the leadership of Governor Basçi...

https://researchturkey.org/governor-basci-should-have-listened-to-assoc-prof-basci/

(Turkish: https://researchturkey.org/tr/governor-basci-should-have-listened-to-assoc-prof-basci/)

Reference no: EM131065229

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