Morning Must-Read: Steve Cecchetti and Kermit L. Schoenholtz: Monetary Policy Target Regimes: Inflation, Price Level, Nominal GDP, etc.

Mark Thoma sends us to Steve Cecchetti and Kermit L. Schoenholtz: Monetary Policy Target Regimes: Inflation, Price Level, Nominal GDP, etc.: “The question of the appropriate policy target…

…has become a matter of intense debate…. We conclude that returning to the price path implied by the pre-crisis trend is a realistic possibility. Returning to the earlier nominal GDP path is not. That said, the inflation overshoot that our rough calculations suggest is moderate, so the benefits are likely to be limited. But the costs could include a loss of credibility in the inflation-targeting framework. Would that really be worth it?