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All in the family: the close connection between nominal-GDP targeting and the Taylor Rule

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  • Evan F. Koenig

Abstract

The classic Taylor rule for adjusting the stance of monetary policy is formally a special case of nominal- gross-domestic-product (GDP) targeting. Suitably implemented, moreover, nominal-GDP targeting satisfies the definition of a "flexible inflation targeting" policy rule. However, nominal-GDP targeting would require more discipline from policymakers than some analysts think is realistic.

Suggested Citation

  • Evan F. Koenig, 2012. "All in the family: the close connection between nominal-GDP targeting and the Taylor Rule," Staff Papers, Federal Reserve Bank of Dallas, issue Mar.
  • Handle: RePEc:fip:feddst:y:2012:i:mar:n:17
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    File URL: http://www.dallasfed.org/assets/documents/research/staff/staff1202.pdf
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    References listed on IDEAS

    as
    1. Matthias Doepke & Martin Schneider, 2006. "Inflation and the Redistribution of Nominal Wealth," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1069-1097, December.
    2. Bennett T. McCallum, "undated". "The Alleged Instability of Nominal Income Targeting," GSIA Working Papers 1998-20, Carnegie Mellon University, Tepper School of Business.
    3. Dennis, Richard, 2001. "Inflation Expectations and the Stability Properties of Nominal GDP Targeting," Economic Journal, Royal Economic Society, vol. 111(468), pages 103-113, January.
    4. Koenig, Evan F., 1996. "Targeting nominal income: A closer look," Economics Letters, Elsevier, vol. 51(1), pages 89-93, April.
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    Cited by:

    1. repec:bla:intfin:v:20:y:2017:i:2:p:114-134 is not listed on IDEAS
    2. repec:eee:quaeco:v:67:y:2018:i:c:p:227-236 is not listed on IDEAS
    3. Alexander Salter, 2014. "Is there a self-enforcing monetary constitution?," Constitutional Political Economy, Springer, vol. 25(3), pages 280-300, September.

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    Keywords

    Monetary policy;

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