How smoking a bong brought back the trauma of being shot by the Taliban an exclusive extract from Malala Yousafzai's memoir

"Explain how the time inconsistency of optimal monetary policy can lead to a stabilisation bias. How would the introduction of a price path target help to address it? After reading the question three times, I still couldn't make sense of it. I groaned, went back to the textbook, tried to read, made a cup of tea, and tried again. Nothing improved my focus."

"Outside, the moon lit up rows of daffodils, and the fresh cut grass stuck to my shoes as I crossed the playing fields. At the farther-most edge of Lady Margaret Hall's gardens sat my destination an old potting shed that the college calls the summerhouse and students call the shack. It had three walls clad in clapboard siding, small rectangular windows, and a wood-shingled roof covered in moss."

Time inconsistency arises when policymakers have an incentive to deviate from previously announced plans, creating a reputation problem that induces private agents to expect policy reversals. Anticipation of such reversals leads agents to adjust wages and prices, producing a stabilisation bias where inflation and output fluctuate away from socially optimal levels. Implementing an explicit price-path target commits the central bank to a future inflation trajectory, anchors expectations, and reduces incentives to renege on policy, thereby mitigating the bias. A student struggles with the question late at night, seeks a break, and walks to a college summerhouse where friends gather amid evocative, rustic surroundings.

Read at www.theguardian.com