Targeting Nominal Income: A Note

Kenneth West ()

No 1835, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper compares nominal income and monetary targets in a standard aggregate demand - aggregate supply framework. If the desirability of policies is measured by their effect on the unconditional variance of output, nominal income targeting is preferable if and only if the aggregate elasticity of demand for real balances is greater than one. This is precisely the opposite of the condition that in Bean (1984) is sufficient to make nominal income targeting preferable.This points out the importance of specification of supply and of objective function in work on nominal income targeting.

Date: 1986-02
Note: EFG
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Citations: View citations in EconPapers (27)

Published as West, Kenneth D. Economic Journal, Vol. 96, December 1986, pp. 1077-1083.

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