Chapter Objectives
By the end of this chapter, students should be able to:
- Explain why the Fed was generally so ineffective before the late 1980s.
- Explain why macroeconomic volatility declined from the late 1980s until 2008.
- List the trade-offs that central banks face and describe how they confront them.
- Define monetary targeting and explain why it succeeded in some countries and failed in others.
- Define inflation targeting and explain its importance.
- Provide and use the Taylor Rule and explain its importance.