Exchange rate versus price level targets and output stability

Article Abstract:

Central banks choose between a price level target and an exchange rate target as the guideline for crafting a monetary policy that accords the greater stability in output. When the central bank pursues a price level target, supply shocks have a stronger effect on output. When it pursues an exchange rate target, demand shocks have a stronger effect on output. In the case of a fixed exchange rate, pure foreign nominal shocks have a positive demand effect, but no real effect when there is a price level target. A simple model is presented, wherein the central bank always achieves its target, hence inflation and price level targets are equivalent.

Prices and rates, Foreign exchange, Foreign exchange rates, Prices, Supply and demand

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Monetary union and the assignment problem

Article Abstract:

The assignment of authority over fiscal and monetary policies in a monetary union was discussed. Specifically, a two-economy system having either a monetary union or a joint fiscal and monetary union was investigated. Using a Keynesian model, it was shown that the separation of monetary and fiscal management leads to unstable interactions which, in turn, lead to the collapse of the financial system.

Fiscal policy, Monetary unions

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A critical evaluation of rate of return analysis

Article Abstract:

The use of the rates of return principle can be a valuable tool for analysis of education policy. The rate of return calculation can also be helpful in forming a basis for educational policy decisions. The potential for upward and downward biases that could lead to variations in survey data and thus faulty analysis is discussed.

Analysis, Education, Return on investment, Rate of return

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