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Economic Commentary

Nominal Income Targeting

In recent years prominent economists from diverse schools of thought have urged policymakers to establish long-term targets for nominal income. The common thread that emerges from these proposals is to extend the announced policy horizon beyond one year, thus clarifying the longer-run intent of policy. In this Economic Commentary, we describe the current framework for monetary policy and suggest that a multiyear nominal income target could be viewed as a practical extension of current policy procedures. To be useful, a nominal income target for monetary policy would need to be credible and hence achievable over a reasonably predictable period of time. In this article we also identify some potential problems for nominal income control, particularly during periods of disinflation.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Carlson, John B. 1984. “Nominal Income Targeting.” Federal Reserve Bank of Cleveland, Economic Commentary 5/21/1984.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International