Macroeconomics › Section O · Monetary policy and bank regulation › Topic O.5
Monetary policy and economic outcomes
A change in one overnight interest rate ends up affecting whether firms build factories, families buy houses and prices rise faster or slower. This topic follows that chain from the policy rate to aggregate demand, and tests it against half a century of Federal Reserve decisions.
In this topic
- Loose and tight policy
- From the policy rate to other rates
- Channels to spending
- Monetary policy in the AD/AS model
- Worked example: closing a recessionary gap
- A rule of thumb: the Taylor rule
- Worked example: applying the Taylor rule
- The Volcker disinflation
- Recent decisions
- Common mistakes to avoid
- Key takeaways
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