Nominal GDP targeting under learning

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• 作者：George Waters
• 关键词：Learning ; Monetary policy ; Interest rate rules
• 刊名：Journal of Economics and Finance
• 出版年：2017
• 出版时间：January 2017
• 年：2017
• 卷：41
• 期：1
• 页码：153-159
• 全文大小：
• 刊物主题：Economics, general; Macroeconomics/Monetary Economics//Financial Economics; Finance, general;
• 出版者：Springer US
• ISSN：1938-9744
• 卷排序：41

文摘

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 optimal policy in an environment where public expectations are formed under learning and the interest rate rule is a function of public expectations. If the policymaker does not have full information about expectations, policy recommendations assuming rational expectations might lead to excess volatility. Nominal GDP growth targeting mitigates these problems in extreme cases, but cannot be recommended as a universal solution.