Introduction
The article I chose argues about discrepancy between tight and monetary policy of United States’ Federal Reserve Bank compared to that of other countries. This article is related to Macroeconomics and concepts are consistent with the course materials. It talks about unemployment, inflation and monetary policy. I found out strengths and weaknesses from the monetary policy that occurred in this article.
Different countries concern about different problems within their society whether it is inflation rate or unemployment rate. Emerging markets like China and dominant markets like Japan and Europe conduct tight monetary policy to raise interest rate. In contrast, the Fed (The Federal Reserve Bank) does not conduct tight monetary policy to raise interest rate. The author of this article states that the U.S. acts like an outlier.
Some officials like the Hawks, people who pursue an aggressive policy, would like to see the Fed to tighten monetary policy. On the other hand, the Fed has conventional Keynesian perspective over the monetary policy. They are optimistic about inflation but aware of unemployment. So, there is a conflicting argument between the hawks and the Fed leaders. Ben Bernanke, chairman of the Fed, considers inflation’s principal determinants to be gap between aggregate demand and aggregate supply. In contrary, the hawks put less emphasis on the gap between aggregate demand and supply to regulate the inflation rate and more weight on the position of monetary policy. Although, there are arguments between hawks and Keynesian, opinions of Ben Bernanke determine the policy since hawks are not in charge at the Fed. Even though Fed can tighten monetary policy by shrinking its balance sheet, uncertain effects of new affair will not encourage Fed to change the monetary policy. Theory Review and Analysis
In contrast to the United