In a nice post on the New York Fed's blog, Liberty Street Economics, Marc Giannoni and Hannah Herman write on price level targeting. In a nutshell, they observe that, whatever the FRB said it was doing ex ante, ex post it has brought about a trend-stationary price level, which is what you would get if you were 'price level targeting'. The question is begged: so why not consolidate this into a formal Price Level Target to lock in the benefits?
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Price level targeting: response to NY Fed…
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In a nice post on the New York Fed's blog, Liberty Street Economics, Marc Giannoni and Hannah Herman write on price level targeting. In a nutshell, they observe that, whatever the FRB said it was doing ex ante, ex post it has brought about a trend-stationary price level, which is what you would get if you were 'price level targeting'. The question is begged: so why not consolidate this into a formal Price Level Target to lock in the benefits?