Patrick Horan and David Beckworth on *The Fate of FAIT* and the Future of the Fed’s Monetary Framework
Macro Musings with David Beckworth
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Why You Shouldn't Change the Nominal GDP Target
If your real GDP growth rate trends down, now you have a higher new trend inflation rate if you're keeping the NGDP target the same. People make their financial plans based on some kind of implicit forecast of where their incomes, their nominal incomes, or dollar incomes are going. And so there's a financial stability argument for not changing the nominal GDP target. A price level target would force all those changes back into contraction or expansion in real GDP.
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