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n Studies in Economics and Econometrics - Should inflation targeting be abandoned in favour of nominal income targeting?

Volume 38, Issue 2
  • ISSN : 0379-6205

Abstract

In the wake of the international financial crisis nominal income targeting has received renewed attention from a number of leading macroeconomists as an alternative to inflation targeting. The case for nominal income targeting has been built on both positive and negative arguments. The negative case relates to perceived inadequacies of inflation targeting, including: the presumed lack of robustness of inflation targeting to aggregate supply shocks, inadequate concern with financial stability, as well as concerns with the accountability of inflation targeting central banks. The positive case for nominal income targeting is that it will better suit current macroeconomic circumstances and policy needs, without sacrificing the gains made by inflation targeting. An evaluation of these arguments is presented in this paper with the conclusion that the case for nominal income targeting is weak compared with the way in which inflation targeting has been implemented internationally.

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/content/bersee/38/2/EJC158310
2014-08-01
2020-07-10

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