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Nominal GDP targeting for a speedier economic recovery

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  • Eagle, David M.

Abstract

For U.S. recessions since 1948, we study paneled time series of (i) ExUR, the excess of the unemployment rate over the prerecession rate, and (ii) NGAP, the percent deviation of nominal GDP from its prerecession trend. Excluding the 1969-70 and 1973-75 recessions, a regression of ExUR on current and past values of NGAP has an R2 of 75%. Simulations indicate that NGDP targeting could have eliminated 84% of the average ExUR during the period from 1.5 years and 4 years after the recessions began. The maximum effect of NGAP on unemployment occurs with a lag of 2 to 3 quarters.

Suggested Citation

  • Eagle, David M., 2012. "Nominal GDP targeting for a speedier economic recovery," MPRA Paper 39821, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:39821
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    File URL: https://mpra.ub.uni-muenchen.de/39821/1/MPRA_paper_39821.pdf
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    References listed on IDEAS

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    Cited by:

    1. Eagle, David M, 2012. "Liquidity Traps and the Price (In)Determinacy of Monetary Rules," MPRA Paper 42416, University Library of Munich, Germany.

    More about this item

    Keywords

    nominal GDP targeting; unemployment; recessions; business cycle;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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