Working Paper

Assessing nominal income rules for monetary policy with model and data uncertainty


Abstract: Nominal income rules for monetary policy have long been debated, but two issues are of particular recent interest. First, there are questions about the performance of such rules over a range of plausible empirical models-especially models with and without rational inflation expectations. Second, there are questions about the performance of these rules in real time using the type of data that is actually available contemporaneously to policymakers rather than final revised data. This paper determines optimal monetary policy rules in the presence of such model uncertainty and real-time data uncertainty and finds only a limited role for nominal output growth.

Keywords: Inflation (Finance); Monetary policy; Income;

Status: Published in The Economic Journal, v. 112, pp. 402-432 (April 2002)

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Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Working Paper Series

Publication Date: 2000

Number: 2000-03