TY  - JOUR
AU  - McCallum,Bennett T.
TI  - The Alleged Instability of Nominal Income Targeting
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6291
PY  - 1997
Y2  - November 1997
UR  - http://www.nber.org/papers/w6291
L1  - http://www.nber.org/papers/w6291.pdf
N1  - Author contact info:
Bennett T. McCallum
Tepper School of Business, Posner 256
Carnegie Mellon University
Pittsburgh, PA 15213
Tel: 412/268-2347
Fax: 412/268-6830
E-Mail: bm05@andrew.cmu.edu
AB  - Recently it has been argued that a monetary policy of nominal income and targeting" would result in dynamically unstable processes for output and inflation.  That results holds in a" theoretical model that includes backward-looking IS an Phillips curve relations rather special and theoretically unattractive.  The present paper demonstrates that replacement of" the special Phillips curve with one of several more plausible specifications overturns the" instability result, whether or not the IS equation is replaced with a forward-looking version. " Thus the instability result is quire fragile and therefore provides almost no basis for a negative" judgment regarding nominal income targeting.
ER  -