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2. Consider the following modification of the model showing dynamic inconsistency of monetary policy. The loss function of the central bank is given by =
2. Consider the following modification of the model showing dynamic inconsistency of monetary policy. The loss function of the central bank is given by = ^2 + ( )^2, while the Phillips curve is = ^ ( ). Here, is the unemployment rate, while is its natural level. The rest of notation is standard, as in class. a. Comment on this loss function of the central bank. How would you describe its objective
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