Monday, July 20, 2009

Behavioural Economics and Monetary Economics

I just came across this today - Janet Yellen from 2007

"With respect to the Federal Reserve’s dual mandate, behavioral research supports the view that inflation is costly, although very modest inflation might help protect against downward nominal wage rigidity. Behavioral macroeconomic models also provide theoretical underpinnings for the view held by most policymakers that, in the short run, monetary policy can and should strive to stabilize the real economy."

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