هدف گذاری فعالیت اقتصادی واقعی و تثبیت تورم در چارچوب کینزی
Abstract
1- Introduction
2- The model
3- Policy regimes
4- The equilibrium
5- Parameterization:
6- Quantitative results
7- Welfare analysis
8- Robustness analysis
9- Conclusion
References
Abstract
This paper examines a nominal GDP growth targeting (NGDP-GT) rule, two Taylor types of rules and a strict inflation targeting regime in a New Keynesian model with the assumption of a positive rate of trend inflation. The model adopts a trend total factor productivity (TFP) growth to compare monetary policies in both high and low growth environments. Policy rankings are affected by the level of trend growth, the level of partial indexation to inflation and different specifications of the Taylor rule. NGDP-GT either outperforms other regimes or is weakly dominated by a desirable policy. Specifically, from the stability perspective, NGDP-GT is preferred compared to a Taylor type of rule and a strictinflation targeting regime in stabilizing the economy. It reduces inflation volatility by 25% or more while performs almost as well in stabilizing output and consumption relative to the Taylor rule. It produces at least 27% less fluctuations in output and consumption, and is almost as well as inflation targeting in stabilizing inflation. From the welfare perspective, when the Taylor rule takes the simple form, inflation targeting is the least desirable framework and NGDP-GT is weakly dominated by the Taylor rule. The conclusions are not conditioning on the trend growth rate or the level of inflation indexation. However, if the Taylor rule takes the form that interest rate responds to deviations of inflation and output growth (TR-II), when a TFP shock hits the economy and trend growth rate A = 1, TR-II generates of the least welfare loss and NGDP-GT performs almost as well. When trend growth rate A =/ 1, NGDP-GT is the most desirable policy regime. When the economy is subject to a markup shock, and A ≥ 1 and (or) partial indexation to inflation = 1, TR-II dominates the other two regimes. For other cases, NGDP-GT is the desirable policy rule.
Introduction
Prior to the normalization ofthe federal funds rate,the past economic crisis and the nominal interest rate at the zero lower-bound (ZLB) revived economists’ interest in the targeting of nominal GDP (or nominal income) as an attractive monetary policy option. Before 2008, the Taylor rule had kept its prevalence of nearly two decades by virtue of being both relatively simple to compute and practically implementable by the Federal Reserve while having great effectiveness in preventing the recurrence of high inflation. As pointed out by Sumner (2014), if the Great Moderation had continued, there would be few reasons to abandon the Taylor rule. The current study is motivated by the limitations of the Taylor rule due to the narrow operation room to the ZLB in recent years and its congenital defects in requiring the measurement of real economic activity and core inflation, and by the discussion on nominal GDP targeting. Since 2016, the Federal Reserve has been gradually raising the federal funds rate with the expectation of restoring it to the normal range. However,the financial market has been well ahead ofthe data, pricing in downside risks such as slow global growth,trade negotiations and expected contractionary monetary policy, leading to dramatic volatility recently, which is consistent with Alan Greenspan’s opinion that traditional monetary policies are not critical at this stage. The current study is motivated by the non-implementability of the traditional monetary policy rules in the foreseeable future due to the ZLB,the normalization ofthe federal rates, and traditional monetary policy’s congenital defects in requiring the measurement of real economic activity and core inflation. Literature on NGDP targeting can be tracked back to the 1990’s. McCallum (1987), McCallum (1989), and Hall and Mankiw (1994) found that nominal GDP targeting rule provides policy makers operability and robustness due to its favorable performance across a range of models.