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A Comparative Analysis of the Stabilizing Properties of Nominal Income Growth Targeting

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Abstract

Given highly persistent cost-push shocks, the relative performance of nominal income growth targeting depends critically on the size of two key parameters. Barring extreme preferences, nominal income growth targeting performs fairly well relative to commitment and pure discretion for small values of the Phillips Curve parameter.

Suggested Citation

  • Alfred V. Guender, 2006. "A Comparative Analysis of the Stabilizing Properties of Nominal Income Growth Targeting," Working Papers in Economics 06/15, University of Canterbury, Department of Economics and Finance.
  • Handle: RePEc:cbt:econwp:06/15
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    File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/0615.pdf
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    References listed on IDEAS

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    1. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
    2. Bennett T. McCallum & Edward Nelson, 2004. "Timeless perspective vs. discretionary monetary policy in forward-looking models," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 43-56.
    3. Henrik Jensen, 2002. "Targeting Nominal Income Growth or Inflation?," American Economic Review, American Economic Association, vol. 92(4), pages 928-956, September.
    4. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
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    Cited by:

    1. repec:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-016-9357-7 is not listed on IDEAS
    2. Benchimol, Jonathan & Bounader, Lahcen, 2018. "Optimal monetary policy under bounded rationality," Research Discussion Papers 9/2018, Bank of Finland.

    More about this item

    Keywords

    Nominal Income Growth Targeting; Timeless Perspective; Discretion; Standard Commitment;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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