What are factors behind inflationary pressure in recent time

Reference no: EM133486253

Assignment: Money and Financial Institutions

The article "Policy in a Changed World"is written by Markus Brunnermeier and published in Finance and Development. The author reflects on the role of central banks and the challenges facing monetary policy in a changing world. Read the attached case study and answer the questions below:

Question A. What are the main challenges raised by the author of this case study concerning monetary policy? What is it that central banks need to consider in responding to the new changes in the global financial system?

Question B. The author speaks of "monetary dominance" in relation to the policy of the central bank. Explain in what ways central banks have become dominant in their conduct of monetary policy.

Question C. In view of the author of the case study, what are the main factors behind inflationary pressure in recent time? How do you interpret the author statement about inflation "the economic models typically employed by central banks often imply that monetary policy should not fully neutralize inflation caused by supply shocks because such inflation is only temporarily, and interest rate policy is meant to control aggregate demand." Explain.

Question D. Carefully read the case study and provide a summary of one page of the main issues behind rethinking monetary policy and the recommendations that the author proposes to meet these challenges.

Question E. Compared to what we discussed in class about monetary policy, can you identify some of the issues that the author introduced but we did not discuss in class.

Reference no: EM133486253

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