Wednesday, August 31, 2022

Reasons For Scepticism About Nominal GDP Targeting — Brian Romanchuk

 There has been an ongoing push for a switch to nominal GDP targeting by Market Monetarists and some mainstream allies. Although I agree that being able to hit a nominal GDP target would be attractive, it would also be attractive to have a yacht. There are a few fundamental issues with nominal GDP targeting. The first is that the target is going to be harder to hit than an inflation target. The second is that it is unclear how much of an advantage the change would have in practice — as opposed to in neoclassical models. Finally, it looks like a much harder proposition to convince voters that a nominal GDP target makes more sense than an inflation target....

Bond Economics
Reasons For Scepticism About Nominal GDP Targeting
Brian Romanchuk

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