Reserveaggregatestotalreservesnonborrowed

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Unformatted text preview: harmful 7 to the real economy. Implicit Nominal Anchor­ FED’s Policy M. Friedman stated that monetary policy effects have long lags. In industrialized countries inflation process have a large inertia. For example for the US economy monetary policy takes over a year to affect the output and over two years to affect inflation. However countries that experienced high and variable inflation will have more flexible prices and shorter lags. The presence of long lags means that monetary policy can not wait until inflation has begun to respond. To prevent inflation therefore monetary policy needs to be forward looking and preemptive. (preemptive: önleyici) FED under Alan Greenspan used the implicit nominal anchor policy which differs from IT in that it does not officially (explicitly) have a nominal anchor and is much less transparent in its monetary policy strategy. 18 ► Advantages of Implicit Nominal Anchor: Does not rely on stable money­inflation relationship. CB uses all the available inf...
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