Some observers have argued that the Federal Reserve would best fulfill its mandate by adopting a target for nominal gross domestic product (GDP). Insights from the monetarist tradition suggest that nominal GDP targeting could be destabilizing. However, adopting benchmarks for both nominal and...

Since the early 1950s, debate between economists of the Cowles Commission and Milton Friedman macroeconomics has developed along two parallel but integrally interconnected tracks. The Cowles Commission track involves development of a model of the economy organized around a system of stochastic...

The language of discretion offers little information about monetary policy beyond the assurance that policymakers always “do the right thing at the right time”. This language renders problematic the reconciliation of central bank independence with accountability. Monetary policymakers should...