It’s about the zero bounds. I’ve already have a proposal for this paper. You can just follow the instruction and write the paper.
final_paper_proposal.docx
instruction.docx
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Zero-Bound Interest Rate
The zero-bond interest rate refers to the lowest limit of 0% for a short-term interest rate, in
which monetary policy is effective in promoting economic growth. Zero bound interest
assumptions increased over recent years. According to monetary policy, zero bound rate
discourages the central bank to reduce the interest rate any more to promote economic growth.
When the interest rate approaches the zero bound, monetary policy is effective in drawing
assumptions to reduce interest rates. This zero bound interferes with the efforts of the central
bank in stimulating the economy.
In this regard, I have chosen the topic because it is relevant to the topic we are studying in class.
This topic relates to monetary policy, and it determines the effectiveness of the central bank in
controlling economic growth (site). I have identified some important of the topic in addressing
monetary issues. For example, Goodfriend (2014) argues that zero bound was used to make the
assumption that the central bank is setting higher rates than the requirements of monetary policy.
In this case, my final paper will explain the effectiveness of a zero bond in regulating interest
rates.
According to Summers (2014), inflation rates contributes to zero bond by lowering short-term
interest rates. On the other hand, Bernanke (2017) argues that the theoretical model determines
inflation, thus influencing the central bank to adjust the nominal interest rate. This source will be
important to my final paper since it will help draw relevant recommendations. For example, I
will recommend the government to increase the employment rate to avoid the effects of the zero
bond rate.
References
Bernanke, B. (2017). How Big a Problem is the Zero Lower Bound on Interest Rates. Blog post,
April, 12, 2017. https://www.brookings.edu/blog/ben-bernanke/2017/04/12/how-big-a- problemis-the-zero-lower-bound-on-interest-rates/
Goodfriend, M. (2014). Overcoming the zero bound on interest rate policy. Journal of Money,
Credit and Banking, 1
Final Paper
Monetary Theory and Policy Fall 2019
Proposed Topic due November 15 at class or via Dropbox in Sakai
Completed Paper Due December 16 noon via Dropbox in Sakai
The goal of this assignment is to develop a policy memo identifying an issue, coming up with a
recommended course of action, and providing a persuasive argument for the recommendation, an
exploration of any risks and challenges in that course of action, and a description of at least one
alternative to the recommended policy action. The paper should be short—roughly five pages and no
more than 7 pages. The paper can be organized in any manner, but should clearly answer each of the
six questions below. The audience for the memo is a member of the central bank’s monetary policy
committee.
The topic of the paper is your choice. It could be a topic that we are covering in class, a topic that is
high on the agenda of monetary policy authorities such as the Federal Reserve, or a monetary policyrelated issue that you are interested in. It’s important that you can draw a connection to monetary
policy. In addressing the issue, there are no right answers. What matters is the quality of your
arguments and marshaling of facts and theory in support of the arguments.
On November 15, please submit your proposed topic for the paper. If possible, please provide a
paragraph describing how you plan to approach the question, whether you believe you have
identified the necessary resources (such as research papers or data) for your paper, and if you
need any other advice. I’ll review your proposal is to make sure the topic you’ve chosen is
manageable within a short paper and to suggest where to look for resources if you need them.
Your paper should address the following questions.
1. Describe the issue you’ve chosen. What problem are you addressing? In describing it, use
language that sophisticated, but not necessarily technical, people can easily understand. (20
points)
2. How important is this issue to monetary policy? Why is it important now? (10 points)
3. What are two or three possible policy actions to address this issue? A decision to take no action
is also a policy action. (20 points)
4. What have you chosen as your recommendation for the best course of action? What are the
arguments in favor of this action, the potential benefits? What are the potential costs,
monetary and nonmonetary? (25 points)
5. What are the risks and challenges in pursuing the recommended course of action? What could
go wrong? (15 points)
6. What is the next best alternative to your potential course of action? Why? (10 points)

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