#1989-005A "The Optimality of Nominal Income Targeting When Wages are Indexed to Price"
by Michael D. Bradley, and Dennis W. Jansen


In this paper we analyze nominal income targeting when wages can be indexed to the price level. This combination of a contemporaneous nominal income targeting policy rule with optimal wage indexing provides the optimal monetary response to both demand and supply shocks, and achieves the full information output level in each period regardless of the elasticity of labor supply. More...

PUBLISHED: Southern Economic Journal, July 1989, 56(1), pp. 13-23