Predicting the impact of institutional change on the effectiveness of monetary policy is best done with a
A)structural model.
B)reduced-form model.
C)black-box model.
D)scientific model.

Question

Quizplus · Accepted Answer

A structural model allows for the analysis of the different channels and transmission mechanisms through which monetary policy affects the economy. This type of model can incorporate various institutional factors, such as changes in the central bank's mandates or the degree of central bank independence. A reduced-form model, on the other hand, may not capture such institutional features and may not be appropriate for predicting the impact of institutional change on monetary policy. A black-box model and a scientific model could also be unsuitable for this purpose, depending on their specific characteristics and assumptions.

Predicting the Impact of Institutional Change on the Effectiveness of Monetary