Econ Professor Scott Sumner has been pushing the idea for a couple decades and has gained considerable backing in the last two years as it became apparent that the U.S. Fed was having great difficulty meeting the goals of its triple mandate: "...maximum employment, stable prices, and moderate long-term interest rates".*
Sumner blogs at TheMoneyIllusion. The discussion about NGDP has increased in volume in the last year, links below.**
From The Market Monetarist:
I stole this from Britmouse (who got it from Bloomberg):*Federal Reserve Act, Section 2a
Abe advocates increased monetary easing to reverse more than a decade of falling prices and said he would consider revising a law guaranteeing the independence of the Bank of Japan. (8301) In an economic policy plan issued yesterday, the LDP said it would pursue policies to attain 3 percent nominal growth.Talk about good news! Shinzo Abe of course is the leader of Japan’s main opposition party the Liberal Democratic Party (LDP). LDP is favourite to win the upcoming Japanese parliament elections – so soon Japan might have a Prime Minister who favours NGDP targeting.
So how could this be implemented? Well, Lars E. O. Svensson has a solution and I am pretty sure he would gladly accept the job if Abe offered him to become new Bank of Japan governor. After all he does not seem to happy with his colleagues at the Swedish Riksbank at the moment....MORE
**Via Real Time Economics:
Further reading on NGDP targeting:See also:
–Scott Sumner’s work.
–The Goldman note.
–Karl Smith, “NGDP Targeting in Real Life”
–Interfluidity: “The Moral Case for NGDP Targeting” (with links to many others, including Paul Krugman and Brad DeLong, on this issue)
–Bill Woolsey, emphasizing the monetarist position that underlies an NGDP target.
–Heard on the Street: Inflated Expectations for Economic Fix (and Sumner’s response here.)
–Free Exchange: Understanding NGDP Targeting
The Case for a Nominal GDP Level Target - Goldman Sachs.