This video focuses on central bank and monetary policy, and specifically how central banking has evolved in recent years. Most banks aim to control interest rates rather than a monetary aggregate. The Taylor Rule can be used to predict how and by how much central banks will move the interest rate, and prescribes that the central bank should decrease the interest rate to stimulate the economy when the productive capacity is underutilized. Professor Larraín goes on to explain inflation targeting and monetary policy frameworks, using the work of the IMF as example. He also explains new approaches to central banking.
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