Publication Date

2016

Abstract


Abstract This paper constructs an index to study two questions within a growing school of macroeconomic thought, Market Monetarism. This school argues that the central bank has full control over all nominal variables in the economy and is solely responsible for aggregate demand management. To manage aggregate demand, Market Monetarism argues the central bank should target Nominal GDP. We address two issues of contention. First, we measure the optimal size of the optimal NGDP target. Second, we measure the extent to which central banks should engage in level targeting, i.e., whether central banks should correct for past errors when hitting their targets. We find evidence consistent with a five percent target but are unable to find consistent evidence regarding level targeting.

Document Type

Article

Keywords

Market monetarism. NGDP targeting. Leveltargeting. Miseryindex

Disciplines

Business | Business Administration, Management, and Operations | Business Intelligence | Business Law, Public Responsibility, and Ethics | Finance and Financial Management

Creative Commons License

Creative Commons Attribution-Noncommercial 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License.