Central banks with dual role face tough choices

Central banks, such as the Federal Reserve, with the dual mandate of maintaining price stability and economic growth, should not give equal weight to their inflation and unemployment goals, a study by the Kansas City Federal Reserve finds.

The research shows that the optimal balance instead depends on weighing up the opportunity cost of employment against the disutility of labour. The research also finds that, when capital formation is considered, a central bank with a dual mandate should focus

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