search query: @author Jensen, H. / total: 7
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| Author: | Jensen, H. |
| Title: | Targeting Nominal Income Growth or Inflation? |
| Journal: | American Economic Review
2002 : SEP, VOL. 92:4, p. 928-956 |
| Index terms: | INCOMES INFLATION ECONOMICS |
| Language: | eng |
| Abstract: | Within a simple New Keynesian model emphasizing forward-looking behavior of private agents, the author evaluates optimal nominal income growth targeting versus optimal inflation targeting. When the economy is mainly subject to shocks that do not involve monetary policy trade-offs for society, inflation targeting is preferable. Otherwise, nominal income growth targeting may be superior because it induces inertial policy making, which improves the inflation-output-gap trade- off. Somewhat paradoxically, inflation targeting may be relatively less favorable the more society dislikes inflation, and the more persistent are the effects of inflation-generating shocks. |
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