Econ423-Monetary Policy Slides - Class_1-20150331.pdf

Econ423-Monetary Policy Slides - Class_1-20150331.pdf - The...

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3/31/2015 1 1 The Federal Reserve System Structure, Objectives, and Tools Topics in Financial Economics ECON 423 – Spring 2015 Christina P. Tapia, Ph.D. March 31, 2015 Established by Federal Reserve Act of 1913: Fed is “independent within the government” Decisions do not need to be ratified by the President or other member of executive branch, but… Federal Reserve System is subject to oversight by Congress Federal Reserve must still work within framework of government’s economic and financial policy Section 2A. Monetary Policy Objectives - “…goals of maximum employment, stable prices, and moderate long-term interest rates” Section 13.3 “Unusual and exigent circumstances” The Federal Reserve System
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3/31/2015 2 3 The Goals of the Fed Protect the health of the economy through monetary policy. Price stability Maximum employment / maximum sustainable growth “Dual mandate” Which indicators does the Fed monitor for these two objectives? “Statement on Longer-Run Goals and Monetary Policy Strategy” (as amended January 27, 2015) 4 The Goals of the Fed Protect the health of the financial system. The Fed: Supervises and regulates banking institutions Maintains stability of financial system and contains systemic risk Provides financial services to Depository institutions U.S. Government Foreign official institutions Fed serves as “Lender of Last Resort” providing credit and liquidity, and serves as the “banker to banks.”
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3/31/2015 3 5 The Organization of the Federal Reserve 7 Appointed Members 7 Governors plus 5 Reserve bank presidents Board of Governors Federal Open Market Committee (FOMC) 12 District Federal Reserve Banks Each with a president and a 9-member board of directors Oversee and supervise Comprise
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  • Spring '16
  • Tapnia
  • Monetary Policy, Federal Reserve System, Fed, U.S. Treasury securities

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