My personal income is lower now than it was 20 years ago - in nominal as well as real terms. But I’m happier in my work and life now than I was then. Which poses the question: why do the main political parties regard the threat of stagnation with such fear?
OTTAWA – Now that the federal Liberals have shied away from their vow to keep annual deficits under $10 billion, they’ve latched on to another fiscal target – and this one will be much easier to meet.
The new government is suddenly talking about the debt-to-GDP ratio, promising repeatedly to keep it on a downward track every year until the next election.
The government calculates its debt-to-GDP ratio by dividing total federal debt by the overall size of the economy, as measured by nominal GDP.
David Beckworth submits: I am late getting to this, but Mark Thoma wants to hear the case for nominal GDP targeting. This approach to monetary policy requires the Fed to stabilize the growth path for total current dollar spending. As an advocate of nominal GDP level targeting, I am more than happy to respond to Mark's request.