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Be careful what you wish for

Summary:
[unable to retrieve full-text content]When the ECB was founded, it adopted inflation targeting with the implicit assumption that the purpose of the policy was to hold down inflation. In fact, the policy regime has mostly forced the ECB to try to raise inflation. In 2020, the Fed adopted an average inflation targeting policy with the implicit assumption that it […]

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When the ECB was founded, it adopted inflation targeting with the implicit assumption that the purpose of the policy was to hold down inflation. In fact, the policy regime has mostly forced the ECB to try to raise inflation. In 2020, the Fed adopted an average inflation targeting policy with the implicit assumption that it […]
Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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