Describe the time lags in the response of output and inflation to the policy actions you have prescribed. U.S. Federal Reserve’s Plosser Opposes QE3 Federal Reserve Bank of Philadelphia president...

Describe the time lags in the response of output and inflation to the policy actions you have

prescribed.

U.S. Federal Reserve’s Plosser Opposes QE3 Federal Reserve Bank of Philadelphia president Charles Plosser does not think that monetary policy can “do much to speed up the slow progress” in the labour market and opposes the Fed’s latest round of stimulus, known as QE3, saying he does not think it prudent to risk the Fed’s hard-won credibility

a. Describe the QE3 asset purchases that are

causing Charles Plosser concern.

b. How might asset purchases damage the Fed’s

credibility?