Monetary Policy

Central banking has evolved in response to economic problems such as the Great Depression and the Great Inflation. By the early 2000s, there was a widespread view that monetary policy had achieved a "Great Moderation" in the economy. However, the events of 2007-09 clearly demonstrated that this complacent view was premature. Monetary policy failed to provide a stable path for nominal spending, inflation, and unemployment.

The program conducts both theoretical and empirical research on various monetary policy options, with a special focus on how monetary rules can be use to provide greater macroeconomic stability.