NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Nominal Income Targeting

Robert E. Hall, N. Gregory Mankiw

NBER Working Paper No. 4439 (Also Reprint No. r1916)
Issued in August 1993
NBER Program(s):   ME   EFG

This paper discusses nominal income targeting as a possible rule for the conduct of monetary policy. We begin by discussing why a rule for monetary policy may be desirable and the characteristics that a good rule should have. We emphasize, in particular, three types of nominal income targets, which differ in how they respond to past shocks, to prices, and real economic activity. A key question is how any of these rules might be implemented in practice. We suggest that the consensus forecast of future nominal income could playa role in ensuring that the central bank does not deviate from its announced target. To show how economic performance might have differed historically if the Fed had been committed to some type of nominal income target, we offer simulations of a simple model of the economy. According to the simulations, the primary benefit of nominal income targeting would have been reduced volatility in the price level and the inflation rate. Whether real economic activity would have been less volatile is unclear.

download in pdf format
   (2518 K)

email paper

This paper is available as PDF (2518 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4439

Published:

Users who downloaded this paper also downloaded these:
McCallum and Nelson w6675 Nominal Income Targeting in an Open-Economy Optimizing Model
Hall and Mankiw Nominal Income Targeting
McCallum w6291 The Alleged Instability of Nominal Income Targeting
Mishkin w6965 International Experiences with Different Monetary Policy Regimes
Feldstein and Stock The Use of a Monetary Aggregate to Target Nominal GDP
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us