Videos with John Taylor teaching his
Taylor rule

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Endogenous economic policy or political macroeconomics
Political macroeconomics or, as it is also called, endogenous economic policy refers to the study of what makes policy makers tick, including governments and central banks.
  Why do policy makers pick those policies they conduct?
  Why do they sometimes appear to create recessions and booms rather than smooth them out?
  Why does it at times appear so hard to deliver price stability?
  What rules or targets should monetary policy adopt in a world subject to periodic shocks to the economy?

This section presents two elearning applets designed to explore the above issues.
  The first one is on the political business cycle.
  The second one is designed to look into monetary policy rules and inflation targets.

This applet explores the possibility that selfish, utility-maximizing governments, with a strong motive to get reelected, may deliberately trigger appropriately timed downswings and upswings of the economy. Such election-geared booms and recessions, engineered for political reasons by the government itself, are called political business cycles.

This applet features an economy with rational expectations and a central bank with some independence from the government. It asks how such a central bank responds to supply shocks. It derives the reaction curve on an intuitive basis and motivates why democracies may suffer from an inflation bias. Finally, it looks at which rules or targets should be assigned to the central bank in order to stabilize income and inflation in a way that accommodates the preferences of society.

Copyright 1997-2013, Manfred Gärtner. All rights reserved.