The public policy blog of the American Enterprise Institute

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Discussion: (2 comments)

  1. Benjamin Cole

    Excellent blogging.
    I think a central bank is a sovereign power, transcending ideologies…the USA has a huge military but no one says we have Kremlin-style government due to that…

  2. Andrew Baldwin

    I find the evidence presented unconvincing that Ms. Yellen would favour NGDP targeting. On the other hand, she is obviously not one to put the price stability goal above the maximum employment goal, so in that sense NGDP targeting in the current situation would be more attractive to her than it would be to, say, John Taylor.

    Personally, I don’t see any merit in NGDP targeting. In the long term, a central bank will only have control of the inflation rate, not the growth rate in GDP. And the GDP deflator is a horrible measure of inflation. No inflation -targeting central bank has ever targeted the GDP deflator, and with good reason.

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