Economics Theses and Dissertations

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Essays on Nominal GDP Targeting
(University of Oregon, 2018-09-06) Brennan, Benjamin; McGough, Bruce
The subject of this dissertation is nominal GDP (NGDP) targeting. In the wake of the Great Recession, some economists have proposed using some form of NGDP target to replace current monetary policy. We evaluate the desirability of NGDP targets based upon their ability to deliver unique and \learnable" equilibria and their welfare gains in the presence of nancial frictions. In the second chapter, we assess the determinacy and E-stability conditions for simple interest rate rules which respond to NGDP's deviation from target in a simple three-equation New Keynesian model. The rules under consideration target either NGDP level or growth, and can either be contemporaneous, one period ahead, or two periods ahead. We also allow for dierent types of information sets for the agents. In the third chapter, we compare welfare loss in consumption equivalent terms for NGDP targets with more conventional monetary policy in a New Keynesian model which features nancial frictions. Finally, in the fourth chapter we continue our analysis from chapter one but now allow for strictly positive trend inflation. We present findings for the relationship between trend inflation and the determinacy and E-stability of the equilibrium when using interest rate rules that target NGPD.