Nominal GDP Targeting with Heterogeneous Labor Supply

James Bullard and Aarti Singh

Journal of Money, Credit and Banking, 2020, vol. 52, issue 1, 37-77

Abstract: We study nominal gross domestic product (GDP) targeting as optimal monetary policy in a model with a credit market friction following Azariadis et al. (2018), henceforth ABSS. We extend the ABSS framework to allow for heterogeneous labor supply. We show that nominal GDP targeting continues to characterize optimal monetary policy in this setting. We also analyze the incomplete markets equilibrium that exists when the monetary policymaker pursues a suboptimal policy, and show how an extension to more general preferences can limit the ability of the policymaker to provide full insurance to households in this setting.

Date: 2020
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Citations: View citations in EconPapers (4)

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https://doi.org/10.1111/jmcb.12615

Related works:
Working Paper: Nominal GDP Targeting with Heterogeneous Labor Supply (2019)
Working Paper: Nominal GDP Targeting with Heterogenous Labor Supply (2018)
Working Paper: Nominal GDP Targeting With Heterogeneous Labor Supply (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:52:y:2020:i:1:p:37-77

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