Bulletin n. 1/2015
June 2015
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • William B English, J David López-Salido and Robert J Tetlow
    The Federal Reserve’s Framework for Monetary Policy: Recent Changes and New Questions
    in IMF Economic Review , Volume 63, Issue 1 ,  2015 ,  22-70
    The Federal Reserve has made substantial changes to its framework for monetary policy in recent years. On balance, the Federal Reserve has moved closer to the “flexible inflation targeting” used, in some form or another, by many foreign central banks. The Federal Reserve’s approach, however, includes a balanced approach to its dual objectives and uses a flexible horizon over which policy aims to foster its objectives. The paper uses a small-scale macro model to help illuminate the Federal Reserve’s use of forward guidance. It also examines the case for establishing a different policy objective, such as a higher inflation target or a nominal income target. The paper finds that such changes might be beneficial, but also have potentially significant drawbacks.
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