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APA
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Business & Marketing
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English (U.S.)
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Macroeconometrics (Business & Marketing Essay)

Essay Instructions:

How Inertial is Monetary Policy? Implications for the Fed's Exit Strategy
Read the VOX article "How Inertial is Monetary Policy? Implications for the Fed's Exit," by Yuriy Gorodnichenko and Olivier Coibion, which can be found here: http://voxeu(dot)org/article/inertia-monetary-policy-implications-fed-s-exit-strategy
Note that this article is from 2011, but, alas, its topic is still relevant today!
To get the ball rolling, start by commenting on the following: What do you think of the points being made (note that serial correlation comes up!)? Do you agree or disagree? "Getting the ball rolling" is a guide for the first several posters.

Essay Sample Content Preview:

Macroeconometrics
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Macroeconometrics
In their article, Gorodnichenko and Coibion (2011) suggest that policy inertia is one of the primary reasons for the Federal Reserve Bank's interest rate decisions after the 2007-2008 financial crisis. I do agree that policy inertia played a significant role in the decisions made by the bank. For years, interest rate smoothing has been viewed as a better and subtler approach to immediate interest rate changes. Furthermore, interest rate smoothing allows the market to adjust accordingly.
The two authors suggest persistent shocks as the other main reason for interest rate decisions by the federal reserve bank. However, the authors are keen to note that persistent shocks play a minor role in policy inertia. Again, I agree with Gorodnichenko and Coibion (2011) because they present clear evidence on why these two interpretations are differ...
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