Should the Fed Target Price Level or Nominal GDP?
May 16, 2019
Drs. Facker and McMillin present evidence that a path target for NGDP may be preferable to a path target for the price level. In addition, they also find that the NGDP path target would have been superior to a continuation of the implicit FIT policy pursued by the Fed before and after the Great Recession. An implication of their results is that a path target for NGDP may promote faster postcrisis recoveries from recessions, including the Great Recession. To learn more, you can read their policy brief here.