Debt and Incomplete Financial Markets: A Case for Nominal GDP Targeting
研究了当债务合同以货币形式固定还款时，名义GDP目标政策通过稳定债务收入比来改善风险分担，并指出在价格粘性下该目标在货币政策中应占重要权重。
For many households borrowing is possible only by accepting a financial contract that specifies a fixed repayment stream. However, the future income that will repay this debt is uncertain, so risk can be inefficiently distributed. This paper shows that when debt contracts are written in terms of money, a monetary policy of nominal GDP targeting improves the functioning of financial markets. By insulating households’ nominal incomes from aggregate real shocks, this policy effectively achieves risk sharing by stabilizing the ratio of debt to income. The paper also shows that when there is price stickiness, the objective of improving risk sharing should still receive considerable weight in the conduct of monetary policy relative to stabilizing inflation.