From Business Insider:
But in a new note out today, Goldman’s Jan Hatzius and Jari Stehn say that one Fed official has already endorsed Nominal GDP targeting in all but name, and that nobody has really realized it yet.
That official is SF Fed Chief Janet Yellen, who is thought to be one of the top contenders for Bernanke’s replacement.
Why is this of interest?
Under such an approach, the central bank chooses a path for the federal funds rate which best meets its objectives over the next several years as a whole, even if this means committing to a policy that may appear suboptimal at certain points along the way. For example, the chosen path may imply that in 2013, the Fed expects inflation in 2015 to be above its target but nevertheless commits to refraining from an aggressive monetary tightening at that point.
