Solve clearly Question 1 Assume the value of a = 4 and b = 8 in the

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Question 1 Assume the value of a = 4 and b = 8 in the loss function stated by Barro and Gordon. State the function and derive the optimal inflation rate (we also call this inflation bias). a. If the rule is that at = 0%, is this a feasible policy option? (10) b. What about the announcement of * = 1.75%? Is this reputational equilibrium or nonfeasible? (5) c. Explain nominal income targeting rule stated by Bean and Mccallum

Posted Date: Jun 30, 2024 08:11 PM

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Solve clearly Question 1 Assume the value of a = 4 and b = 8 in the

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