is higher than in the pce ) weight based on expenditure shares using nipa ( e. g., expenditure share of medical services is higher than in the cpi ) fixed weights for 1 year reflecting expenditures from 2 years ago weights change to reflect changes in the goods consumers buy examples of select components of core pce inflation components of core pce inflation examples core goods new motor vehicles used motor vehicles other durable goods nondurable goods housing services rent core services excluding housing airline fares medical care benefits of price stability • • • • price stability is one of two goals assigned to the federal reserve by law broad consensus among economists that price stability is a desirable objective stable inflation means there is low uncertainty about future course of prices low uncertainty is beneficial for the decisionmaking processes of households and firms unanticipated high inflation is costly • high unanticipated inflation lowers workers ’ real wages • even anticipated rates of inflation can produce redistribution of income • u. s. tax code does not fully take into account inflation • purchasing power of retirement income may be much lower than anticipated unanticipated low inflation is costly • low inflation affects borrowers • low inflation restricts the fomc ’ s scope to lower real interest rates policy risks • the fomc must balance competing risks given its dual mandate of promoting maximum employment and stable prices • current environment : – risk of policy not being sufficiently restrictive to bring back inflation to 2 percent over time – risk of policy being too restrictive and unnecessarily increasing the likelihood of recession • in the face of this latter risk, some economists argue that a higher inflation target, 3 or 4 percent, is better benefits of credibility • changing the fomc ’ s long - run inflation objective would hurt the fomc ’ s credibility • the effectiveness of monetary policy depends on the fomc ’ s credibility • benefits of credibility outweigh costs of a 2 percent inflation target ( as opposed to a higher inflation target ) conclusions • persistently high inflation is costly • persistently low inflation is costly • changing the 2 percent inflation target would damage the central bank ’ s credibility, so i am committed to lowering inflation to our 2 percent target • exciting time to study economics

various studies including those published in our very own agriculture finance year book have demonstrated that these tax incentives did not result in any significant gains to farmers in the form of either reduced input prices, or an increase in lending to the agriculture sector. instead they benefited mostly the banks and importers while denying government revenues ; and as a result, government embarked on eliminating many of these tax incentives in the financial year 2014 / 15. what lessons can we learn from these experiences? agriculture in uganda is dominated by small holder farmers, of whom two thirds are engaged in subsistence agriculture, according to the 2014 uganda national population and housing census. therefore the agriculture development strategy must focus on the small holder farmer. any risk - sharing model for financing must be based on a clear understanding of the profile and origins of the risk. in this case, we must resolve what continually constrains the modernization of agriculture and what makes small holder farming very risky for financing. smallholder farmers face a raft of constraints to modernising their farming, of which lack of financing is not necessarily the most important. most smallholders produce very little surplus, beyond their own needs for consumption, which can be marketed. furthermore, the vulnerability of agriculture to the weather, pests and other hazards means that surpluses cannot be produced with any degree of reliability. in these circumstances, agriculture assumes a very high risk premium, and borrowing money to purchase agricultural inputs is very risky for farmers, and they will unavoidably struggle to repay loans. modernising smallholder agriculture in uganda requires a holistic set of interventions. the first priority should be to assist farmers to increase their output without exposing them to greater risks. there is evidence from agricultural projects that if smallholder farmers are given advice on the adoption of good agricultural practices, such as better seeds, optimal crop spacing, weeding, post - harvest handling etc, substantial increases in yields per acre can be achieved, even without the application of purchased inputs such as fertilisers. this would allow farmers to produce more marketable surplus and thereby generate cash incomes. the next step would then be to start applying modest amounts of purchased inputs such as fertilisers, to increase yields further. luckily, we are not short of demonstrable projects in the uganda and elsewhere that have markedly improved yields per acre and income of the farmers by providing this sort of comprehensive support. the 2015 agriculture finance year book for uganda provided an assessment of one such pilot by the one acre - fund in kamuli district.