Nominal GDP targeting for a speedier economic recovery

David Eagle

MPRA Paper from University Library of Munich, Germany

Abstract: For U.S. recessions since 1948, we study paneled time series of (i) ExUR, the excess of the unemployment rate over the prerecession rate, and (ii) NGAP, the percent deviation of nominal GDP from its prerecession trend. Excluding the 1969-70 and 1973-75 recessions, a regression of ExUR on current and past values of NGAP has an R2 of 75%. Simulations indicate that NGDP targeting could have eliminated 84% of the average ExUR during the period from 1.5 years and 4 years after the recessions began. The maximum effect of NGAP on unemployment occurs with a lag of 2 to 3 quarters.

Keywords: nominal GDP targeting; unemployment; recessions; business cycle (search for similar items in EconPapers)
JEL-codes: E24 E5 E52 (search for similar items in EconPapers)
Date: 2012-03-08
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:39821

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