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Tag Archives: exchange rates

If you don’t want people to believe you will do X, then don’t do X

There are two ways of thinking about the relationship between monetary policy tools and monetary outcomes. Standard approach: The standard view is that lower interest rates lead to higher NGDP growth. In addition, a bigger monetary base leads to a higher NGDP. Alternate view: An alternative approach starts from the assumption that the central bank will do whatever it takes to hit its target, and then asks what the equilibrium interest rate, or equilibrium monetary...

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