Download 16 questions on monetary policy asked by Professor Alan Blinder

16 questions on monetary policy
asked by Professor Alan Blinder
15th Vice Chairman of the Federal Reserve
In office: Jan 31,1996-Feb 1, 2006
Today: Princeton University
1) What is the proper objective function for
monetary policy?
2) How transparent should the central bank be?
3) Should the central bank be an inflation
targeter, as that term is commonly used?
4) Should monetary policy decisions be made
by a single individual or by a committee –
and, if the latter, what type of committee?
5) Should the central bank also regulate and/or
supervise commercial banks?
6) Is the inclination of central bankers to avoid
policy reversals appropriate?
7) Does the preference of central bankers for
gradualism make sense?
8) Is „fine tuning” possible after all? And if so,
should central bankers attempt it?
9) Should central bankers lead or follow the
financial markets?
10) Should central bankers in floating exchange
rate regimes intervene in the foreignexchange market?
11) Should central bankers use derivatives in the
conduct of monetary policy?
12) Should transmission go through the term
structure of interest rates?
13) Should transmission go through the
exchange rate?
14) How should the central bank deal with
asset-market bubbles?
15) How should the central bank deal with the
zero lower bound on nominal interest rates?
16) Do the world’s giant central banks have
global responsibilities?
The exchange rate
• Foreign exchange rate – the price at which one currency
exchanges for another; the value of one currency expressed in
terms of another currency
• Foreign exchange market (FOREX) – the market in which the
currency of one country is exchanged for the currency of
another
• Currency appreciation – the rise in the value of one currency
in terms of another currency
• Currency depreciation – the fall in the value of one currency
in terms of another currency
Alternative currency regimes:
•
•
•
•
•
•
•
Currency board
Fixed peg
Crawling peg
Crawling band
Managed floating
Exchange rate smoothing
Pure floating
Main factors on which demand and supply
in the Foreign Exchange Market depend:
• The current exchange rate
• The interest rate differentials
• The expected future exchange rate
Determinants of exchange rate levels:
• Structural: structure of a given economy, its competitiveness, current
account
• Business cycle related: GDP dynamic, inflation dynamic, changes of
interest rate
• Technical: intensity of technological change, technical infrastructure of
markets
• Political: political stability vs. political risks
• Institutional: central bank’s credibility, quality of fiscal policy
• Psychological: expectations of business and private households,
perception of financial risk
1.6
1.5
1.2
01/2003
03/2003
05/2003
07/2003
09/2003
11/2003
01/2004
03/2004
05/2004
07/2004
09/2004
11/2004
01/2005
03/2005
05/2005
07/2005
09/2005
11/2005
01/2006
03/2006
05/2006
07/2006
09/2006
11/2006
01/2007
03/2007
05/2007
07/2007
09/2007
11/2007
01/2008
03/2008
05/2008
07/2008
09/2008
11/2008
01/2009
03/2009
05/2009
07/2009
09/2009
11/2009
01/2010
03/2010
05/2010
07/2010
09/2010
11/2010
01/2011
03/2011
Wykres 8. Kurs średni miesięczny USD/€uro -styczeń 2003 - marzec 2011
1.7
15 września 2008 upadek banku
Lehman Brothers
Lato 2007 - początek
zaburzeń na rynku
hipotecznym w USA
Początek grudnia 2009
- obniżenie ratingu
Grecji do BBB+
1.4
1.3
Sierpień 2010 wznowienie "luzu
ilościowego" w USA
1.1
USD/Euro
1
Wykres 9. - Kursy PLN/€uro i PLN/$ w okresie styczeń 2003 - marzec 2011
6
18 lutego 2009 - wymiana
części funduszy europejskich
na rynku walutowym
Kurs średni PLN/€uro
w okresie styczeń
2005-marzec 2011
wyniósł 3,92
15 września 2008 upadek banku Lehman
Brothers
5
4
3
1 maja 2004 Polska w UE
2
Sierpień 2010 wznowienie "luzu
ilościowego" w USA
Lato 2007 - pierwsze
zaburzenia na rynku
hipotecznym w USA
1
PLN/Euro
PLN/$
Kurs średni PLN/Euro 2005-2011
01/2011
10/2010
07/2010
04/2010
01/2010
10/2009
07/2009
04/2009
01/2009
10/2008
07/2008
04/2008
01/2008
10/2007
07/2007
04/2007
01/2007
10/2006
07/2006
04/2006
01/2006
10/2005
07/2005
04/2005
01/2005
10/2004
07/2004
04/2004
01/2004
10/2003
07/2003
04/2003
01/2003
0