Recently David Beckworth and Martin Sandbu, among others, have drawn attention to an interesting paper by James Bullard and Riccardo DiCecio unveiled in Norway earlier this year. In it, Bullard and DiCecio investigate a model economy possessing both a large private credit market and "Non-state contingent nominal…
On Twitter last week Stephen Williamson wrote that he was "puzzled by the infatuation with NGDP targeting. We have good reasons to care about the path for the price level and the path for real GDP. Idea seems to be that if you smooth Py … you…
The Federal Reserve plans to review its inflation growth rate target and potentially select a new monetary policy target. Many Fed officials are in favor of the idea, including Chair Powell. And the latest FOMC minutes show that the Fed’s policy setting committee has discussed new targets….
Alternative monetary policy targets continue to gain advocates. While Chair Powell was waiting to take over leadership at the Fed, internal support for rethinking the current inflation rate target was building. And while there are various possibilities to consider — such as raising the inflation rate target,…
The familiar chart below illustrates the depth of the decline in real output during the 2007-09 Great Recession (the shaded period), and the failure of the recovery to return real output to its “potential” path (in other words, to eliminate the estimated “output gap”) during the subsequent…