• Is monetary policy a more effective stabilisation tool than fiscal policy? Is there any potential interaction between fiscal policy and monetary policy? Why is it advantageous to have two separate authorities to conduct monetary policy and fiscal policy independently?
• Is it true that in an environment with high and stable inflation the government does not have much to gain from reducing the inflation rate?
• As a group, collect data for inflation in the US and in one developing country of your choice from 1960 onwards and then answer the following questions:
  • Describe the evolution of inflation. Is the volatility of inflation similar across time for each country?
  • Is the level of inflation different across the US and the developing country?
  • If so, what factor in the conduct of monetary policy could explain this difference? Relate your answer to the independence of the central bank or to other mechanisms related to the conduct of monetary policy.