文档介绍：ary Policy, In‡ation,
and the Business Cycle
Chapter 1
Introduction
Jordi Galí
CREI and UPF
August 2007
The present monograph seeks to provide the reader with an overview of
modern ary theory. Over the past decade, ary economics has
been among the most fruitful research areas within macroeconomics. The
e¤orts of many researchers to understand the relationship between mone-
tary policy, in‡ation and the business cycle has led to the development of
a framework–the so called New Keynesian model– that is widely used for
ary policy analysis. The following chapters o¤er an introduction to
that basic framework and a discussion of its policy implications.
The need for a framework that can help us understand the links between
ary policy and the aggregate performance of an economy seems self-
evident. On the one hand, and whether in their condition as consumers,
workers or investors, citizens of modern societies have good reason to care
about developments in in‡ation, employment, and other economy-wide vari-
ables, for those developments a¤ect to an important degree people’soppor-
tunities to maintain or improve their standard of living. On the other hand,
ary policy, as conducted by central banks, has an important role in
shaping those macroeconomic developments, both at the national and supra-
national levels. Changes in interest rates have a direct e¤ect on the valuation
of …nancial assets and their expected returns, as well as on the consumption
and investment decisions of households and …rms. Those decisions can in
turn have consequences for GDP growth, employment and in‡ation. It is
thus not surprising that the interest rate decisions made by the Fed, the
ECB, or other prominent central banks around the world are given so much
attention, not only by market analysts and the …nancial press, but also by
the general public. It would thus seem important to understand how those
interest rate decisions end up a¤ecting the various measures