Targeting nominal income: A closer look

I derive conditions under which the monetary authority should target nominal spending. The relevant spending target is a weighted average of income and consumption. Despite ‘sticky’ nominal wages, under optimal policy the economy behaves as if all markets clear.

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Bibliographic Details
Published in:Economics letters 1996, Vol.51 (1), p.89-93
Main Author: Koenig, Evan F.
Format: Article
Language:English
Subjects:
Income
Monetary policy
Nominal income target
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Description
Summary:I derive conditions under which the monetary authority should target nominal spending. The relevant spending target is a weighted average of income and consumption. Despite ‘sticky’ nominal wages, under optimal policy the economy behaves as if all markets clear.
ISSN:0165-1765
1873-7374
DOI:10.1016/0165-1765(95)00792-X