Bullard, James Brian; DiCecio, Riccardo - 2019 - This draft: April 2, 2019
We study nominal GDP targeting as optimal monetary policy in a simple and stylized model with a credit market friction … consumption in the U.S. data. We show that nominal GDP targeting continues to characterize optimal monetary policy in this setting …. Optimal monetary policy repairs the distortion caused by the credit market friction and so leaves heterogeneous households …