In this paper the authors analyze flexible inflation targeting and nominal income targeting as two different monetary strategies in a simple dynamic macromodel. The key results of this paper are: first, for both targeting regimes optimal monetary policy response leads to a shock-dependent...

In this paper we analyze flexible inflation targeting and nominal income targeting as two different monetary strategies in a simple dynamic macromodel. Furthermore we analyze inflation targeting in a two-period time-lag version of the model. The key results of our paper are: First, for both...