Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/215463
Authors: 
Billi, Roberto
Year of Publication: 
2020
Series/Report no.: 
Sveriges Riksbank Working Paper Series 385
Abstract: 
I evaluate the welfare performance of a target for the level of nominal GDP in a New Keynesian model with unemployment, accounting for a zero lower bound (ZLB) constraint on the nominal interest rate. Nominal GDP targeting is compared to employment targeting, a conventional Taylor rule, and the optimal monetary policy with commitment. I find that employment targeting is optimal when supply shocks are the source of fluctuations; however, facing demand shocks and the ZLB constraint, nominal GDP targeting can outperform substantially employment targeting.
Subjects: 
employment targeting
optimal monetary policy
Taylor rule
ZLB
JEL: 
E24
E32
E52
Document Type: 
Working Paper

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