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Tag Archives: Friedman rule

What is the optimal NGDP growth rate?

I often get commenters asking my opinion on the optimal NGDP growth rate. This is a difficult question, which can be addressed from a number of perspectives. Josh Hendrickson has a new policy brief at Mercatus, which advocates the “Friedman rule” for NGDP targeting.  This would involve setting the growth rate for NGDP at a point where risk free short term interest rates would be close to zero and there would be no opportunity cost of holding currency. Because currency...

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