The Policy Chair

You chair the central bank. Each quarter the dashboard hands you the economy — inflation, the output gap, jobs, the currency, the debt — and you set the policy rate. Then it moves, with a lag, and your own past calls become the state you have to fix. It starts routine. By the end you'll face a stagflation shock, the zero lower bound, a peg under attack and a debt spiral — often at once. The Taylor rule alone won't save you: you have to know which regime you're in. Every world of the course, live.

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CredibilityThe markets' & public's trust in you. Hit the mandate to build it. Zero → removed from office.

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Price stability100 when inflation sits at the 2% target; falls as inflation strays.

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Jobs & output100 at potential output. A recession (negative output gap) hurts most.

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ExpectationsHow un-moored inflation expectations are (lower is better). Over 100 → they de-anchor.

You are the central bank. One rate, every quarter, a whole economy on the line.