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The central banks that I have studied typically have museums attached to them. I have a particular fondness for the Geldmuseum of the Deutsche Bundesbank in Frankfurt with its handsome curation of the history of coinage and banknotes along with elegantly designed exhibits that explain the nature of money and the operation of central banks. A colleague at the Bundesbank suggested that on my next visit to the museum I should try an interactive display that simulated the role of a central banker illustrating how monetary policy influences the economy over time. I followed his advice.The simulation was ingenious. It provided a careful explanation of the policy tools available to central banks-basically the manipulation of short-term interest rates that determined the availability of money and credit to the German economy-and how these monetary interventions are meant to work along with the contingencies and the constraints associated with each policy move. Then it presented a series of economic scenarios and asked you, in the role of the central banker, to select an appropriate policy stance. What made the simulation particularly intriguing (and rankling) was that as the simulation played out over time the implications of each of your prior decisions was transmitted to the German economy. Thus, at each subsequent stage of the simulation you were compelled to take a policy stance that responded to new conditions in the economy-specifically price inflation and economic growth-that you had a hand in creating. Apart from evoking mild mortification, the simulation demonstrated even on this very elementary level the complexities faced by central bankers in their role in stabilizing

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