Targeting Nominal GDP growth by monetary policymakers is equivalent to a restriction on policymaker preferences for an optimality condition derived under rational expectations. This paper reports the results of simulations of a calibrated model comparing Nominal GDP growth targeting with the...

In an October 1995 FOMC meeting, several participants inquired about the potential value and meaning of the spread between the Treasury bill rate and nominal GDP for monetary policy. The idea comes from Salomon Brothers, who think that it is an indicator of policy, in the sense that a high...

The real output effects of disinflation are shown to depend not only on whether inflation is flexible or persistent, but also on the type of policy rule used by the monetary authority to implement disinflation. This paper contrasts the consequences of a planned reduction in inflation for (1) an...

We show that actively stabilizing economic activity plays a more prominent role in the conduct of monetary policy when potential output is subject to hysteresis. We augment a basic NewKeynesian model by hysteresis in potential output and contrast simulation outcomes of this extended model to the...

In the wake of the 2008 financial crisis, many countries are hoping that massive increases in their money supplies will revive their economies. Evaluating the effectiveness of this strategy using traditional statistical methods would require the construction of an extremely complex economic...