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Nominal Income Targeting in an Open-Economy Optimizing Model

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  • McCallum, B.T.
  • Nelson, E.

Abstract

The purpose of this paper is to examine the merits of monetary policy rules that utilize as their principal target variable the level or growth rate of some aggregate reasure of nominal spending, such as nominal GDP, rather than a monetary aggregate or an index of inflation (either alone or in combination with some measure of the output gap). Because there is a large and rich literature on nominal income targeting, (briefly, NIT), we begin in Section 2 with a short review of existing arguments in its favor. Then in Section # we present some evidence which suggests that NIT is in effect utilized in practice in the United States.

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Bibliographic Info

Paper provided by Stockholm - International Economic Studies in its series Papers with number 644.

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Date of creation: 1998
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Handle: RePEc:fth:stocin:644

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Keywords: MONETARY POLICY ; GROSS DOMESTIC PRODUCT ; INFLATION ; UNITED STATES STOCKHOLM SWEDEN. 37p.;

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References

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  19. Henderson, Dale W. & McKibbin, Warwick J., 1993. "A comparison of some basic monetary policy regimes for open economies: implications of different degrees of instrument adjustment and wage persistence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 221-317, December.
  20. Bennett T. McCallum, 1994. "A Semi-Classical Model of Price Level Adjustment," NBER Working Papers 4706, National Bureau of Economic Research, Inc.
  21. Bennett T. McCallum, 1993. "Specification and Analysis of a Monetary Policy Rule for Japan," NBER Working Papers 4449, National Bureau of Economic Research, Inc.
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  25. Ratti, Ronald A, 1997. "The Stabilizing Properties of a Nominal GNP Rule: A Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(2), pages 263-69, May.
  26. Taylor, John B., 1985. "What would nominal GNP targetting do to the business cycle?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 22(1), pages 61-84, January.
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  37. Martin Feldstein & James H. Stock, 1994. "The Use of a Monetary Aggregate to Target Nominal GDP," NBER Chapters, in: Monetary Policy, pages 7-69 National Bureau of Economic Research, Inc.
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  48. repec:sae:niesru:v:145:y::i:1:p:43-63 is not listed on IDEAS
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  52. Bennett T. McCallum, 1993. ""Specification and Analysis of a Monetary Policy Rule for Japan" Reply to Comments by Kunio Okina," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 11(2), pages 55-57, December.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Central Banks Can Phase in Nominal GDP Targets without Losing the Inflation Anchor
    by jfrankel in Jeff Frankels Weblog on 2012-12-26 02:59:14
  2. Friedman provided a theory for NGDP targeting
    by Lars Christensen in The Market Monetarist on 2011-11-06 08:18:19
  3. Nominal GDP Targeting Could Take the Place of Inflation Targeting
    by jfrankel in Jeff Frankels Weblog on 2012-06-13 22:10:10
  4. Jeff Frankel restates his support for NGDP targeting
    by Lars Christensen in The Market Monetarist on 2012-06-14 06:19:22
  5. "Inflation Targeting is Dead"
    by Mark Thoma in Economist's View on 2012-06-14 12:26:56
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