Degree Name
Master of Science
Department or Program
Economics
Advisor
Sharma, Subhash C.
Abstract
The essence of monetary policy consists of the introduction of innovative techniques into the system via economic debate. There is a period of incorporation or absorption of ideas, as well as, a period of readjustment. This paper reviews the key economic models that govern modern monetary policy; these constitute the decision making criteria for the Federal Reserve System. This paper reviews the creation of the Federal Reserve System as well as its operating procedures and how it implements monetary policy. We gain factual knowledge of monetary economic models such as the new Keynesian model and we discuss the importance of the Taylor rule. Furthermore, the paper reviewed how the United States economy was affected by variations in monetary policy and how the Federal Reserve adapted to the fluctuation in the economy.