EconPapers    
Economics at your fingertips  
 

Targeting Nominal Income Growth or Inflation?

Henrik Jensen ()

No 2341, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Within a simple New Keynesian model emphasizing forward-looking behaviour of private agents, I evaluate optimal nominal income growth targeting versus optimal inflation targeting. When the economy under consideration is mainly subject to shocks that do not involve monetary policy trade-offs for society, inflation targeting is preferable. Otherwise, nominal income growth targeting may be superior because it induces inertial interest rate behaviour that improves the inflation-output gap trade-off. Somewhat paradoxically, inflation targeting is relatively less favourable the more society cares for inflation, and the more persistent are the effects of inflation-generating shocks.

Keywords: Inflation Targeting; Interest Rate Inertia; Monetary Policy; Nominal Income Growth Targeting (search for similar items in EconPapers)
JEL-codes: E42 E52 (search for similar items in EconPapers)
Date: 1999-12
References: Add references at CitEc
Citations: View citations in EconPapers (20) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2341 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Targeting Nominal Income Growth or Inflation? (2002) Downloads
Working Paper: Targeting Nominal Income Growth or Inflation? Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:2341

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=2341

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2020-09-10
Handle: RePEc:cpr:ceprdp:2341