Facts, Fears, and Functionality of NGDP Level Targeting

A Guide to a Popular Framework for Monetary Policy

Nominal GDP level targeting (NGDPLT) has become an increasingly popular monetary policy framework over the past decade. This rising popularity has led to increased interest in, as well as some confusion over, how this framework actually works. This paper attempts to address this interest by summarizing basic facts of NGDPLT and addressing some of the fears surrounding it. The paper also demonstrates how NGDPLT might work in practice.