Macroeconomic policy has two critical unresolved questions with real-world implications: whether central banks should raise inflation targets (e.g., from 2% to 4%) and how electronic money systems like central bank digital currencies (CBDCs) could address the zero lower bound (ZLB) on interest rates. These gaps matter because they shape monetary policy effectiveness, financial stability, and economic resilience—especially during crises.

Research Focus and Approach

One way to explore these questions could involve targeted research combining economic modeling and policy analysis. For inflation targets, dynamic stochastic general equilibrium (DSGE) models could assess tradeoffs like unemployment volatility versus inflation expectations, while historical comparisons (e.g., 1970s vs. post-2008 periods) might reveal risks. For electronic money, simulations could evaluate CBDC adoption scenarios, such as their impact on bank disintermediation, alongside surveys of political constraints like public trust or legislative hurdles.

• Key stakeholders: Central banks (e.g., Fed, ECB), academics studying monetary policy, and financial institutions adjusting to potential shifts.
• Incentives: Policymakers seek credible analysis to avoid missteps; governments prefer solutions reducing fiscal burdens; the private sector may resist disruptive changes like CBDCs.

Execution and Feasibility

A phased approach might start with a literature review and data collection (e.g., historical inflation regimes, CBDC pilot results), followed by modeling and policy briefs. An MVP could be a working paper analyzing one sub-question, such as whether a 4% inflation target reduces ZLB frequency, using existing datasets. Challenges like data limitations could be addressed via synthetic controls or quasi-experiments, while political resistance might require framing findings as non-partisan through partnerships with think tanks.

Existing works, such as the IMF’s 2018 policy survey or Blanchard’s 2010 case for higher inflation targets, leave gaps this research could fill—for example, by quantifying ZLB risks under electronic money systems or incorporating wage rigidity empirics. By blending academic rigor with policy relevance, the project could offer actionable insights for decision-makers.