Nominal GDP Futures Contract Targeting

W. William Woolsey and Scott Sumner

Chapter 23 in The World Scientific Handbook of Futures Markets, 2015, pp 751-770 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Nominal GDP futures contracting is a proposed monetary regime that requires a central bank to buy and sell index futures contracts on nominal GDP at a specified price. The purpose is to harness market forces to the goal of stabilizing the growth path of the total dollar value of spending on goods and services. The central bank adjusts the quantity of money according to trades made by those speculating on the futures contract. The proposed regime provides advantages for macroeconomic stability relative to a more traditional approach to monetary policy such as the Taylor rule, including less disruptive responses to supply shocks, stronger recoveries after demand shocks, and less susceptibility to problems associated with the zero nominal bound on interest rates.

Keywords: Futures Markets; Pricing; Risk Management; Futures Trading; Stock Indexes; Interest Rates; Futures Prices; Portfolio Theory; Hedge Funds; Foreign Exchange (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (14)

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