Hayek's Rule, NGDP Targeting, and the Productivity Norm: Theory and Application

2014. Journal of Stock & Forex Trading

28 Pages Posted: 31 Dec 2013 Last revised: 15 Feb 2020

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

Metropolitan State University of Denver; American Institute for Economic Research; UCEMA Friedman-Hayek Center for the Study of a Free Society

Date Written: January 29, 2014

Abstract

The 2008 crisis demonstrated that, absent inflationary pressures, significant economic stress can occur as a consequence of loose monetary policy. This scenario raises the question as to whether there is a better alternative to price stability as a guiding principle for monetary policy. In this paper, I explore the theoretical insights of the productivity norm, its superiority to price stability as the focus of monetary policy, and the challenges of applying such principles by central banks.

Keywords: Hayek Rule, NGDP Targeting, productivity norm, monetary policy, price level

JEL Classification: E31, E32, E52, E58

Suggested Citation

Cachanosky, Nicolas, Hayek's Rule, NGDP Targeting, and the Productivity Norm: Theory and Application (January 29, 2014). 2014. Journal of Stock & Forex Trading, Available at SSRN: https://ssrn.com/abstract=2373230 or http://dx.doi.org/10.2139/ssrn.2373230

Nicolas Cachanosky (Contact Author)

Metropolitan State University of Denver ( email )

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United States

HOME PAGE: http://www.ncachanosky.edu

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
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UCEMA Friedman-Hayek Center for the Study of a Free Society ( email )

Buenos Aires
Argentina

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