Japan abandons Fed-style inflation targeting and targets GDP growth instead

Scott Sumner quotes Marcus Nunes:

Japanese Prime Minister Shinzo Abe vowed on Thursday to raise gross domestic product by nearly a quarter to 600 trillion Japanese yen ($5 trillion), pledging to refocus on the economy after the passage of controversial security bills that eroded his popularity. Abe unveiled the plan at a news conference marking his election to a second three-year term as ruling Liberal Democratic Party leader and hence, premier. Abe stopped short, however, of setting a timeframe for the new GDP target, which could raise doubts about the goal.

System-based rules targeting (nominal) GDP growth are likely to deliver more stable and consistent economic performance than the discretionary monetary policy followed by the Fed. No matter how smart the people on the FOMC, they are reacting to imperfect data in a complex world. Many decisions, in hindsight, prove to be late. Sometimes with disastrous consequences.

For a detailed discussion, see Marcus Nunes: The “Rules debate” once again.

Read more at Japan adopts an NGDP target, Scott Sumner | EconLog | Library of Economics and Liberty