What Should Central Banks Do- Frederic Mishkin.
Basic Question: What changes to the Fed’s conduct would Mishkin recommend on the basis of attributes of other central banking systems?
a) Why according to Mishkin is price stability the overriding goal of successful monetary policy? What is his assessment of the Federal Reserve Bank’s commitment to price stability relative to other countries?
b) What does Mishkin mean by explicit nominal anchor? Has the Federal Reserve Bank adopted a nominal anchor such as an inflation target? What are some of the advantages and disadvantages of adopting an inflation target and how does it relate to the monetary policy goals of price and output stability?
c) How does Mishkin relate goal and instrument independence to the time inconsistency problem in monetary policy? What arguments does he present for and against the Fed’s independence in its choice of goals and instruments relative to the European Central Bank?
d) According to Mishkin, what is the relevance of central bank accountability and transparency in a democratic society to macroeconomic performance? Does the Fed’s performance in this area mirror that of the central bank under the Eurosystem?
