NGDP Targeting: A Recipe For Stagflation

Should the Federal Reserve abandon its traditional tactic of targeting interest rates in favor of targeting a specific level of nominal gross domestic product?

This idea—known as NGDP targeting—has recently emerged as one of the hottest topics in economics. Bentley University economist Scott Sumner deserves a lot of the credit for popularizing the concept that has recently been endorsed by Goldman Sachs economists Jan Hatzius and Sven Jari Stehn, Paul Krugman and many others.