Nick Rowe: Worthwhile Canadian Initiative: "Are We at Full Employment Yet?": "Set aside the other benefits of switching from an inflation target to an NGDP level path target. If switching targets meant we wouldn't need to ask "Are we at full employment yet?" in order to figure out whether monetary policy is too tight or too loose, that would be a major advantage. Because it's a question we can't answer until it's too late. Instead we would simply hope that we are not at full employment yet: we would hope that target NGDP growth would in future be composed more of real GDP growth and less of inflation. And we would be forced to concentrate instead on microeconomic policies that might improve that composition...
#noted #monetarypolicy
