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Inflation targeting has failed. In this report, Scott Sumner argues that the Bank of England should adopt a policy of nominal GDP (NGDP) targeting, which would address the dual concerns of macroeconomic policy – inflation and growth – in one target. Although such a policy would not fully solve the problems of inflation-related malinvestment, the policy would impose restraint on government monetary expansion in times of economic expansion. Sumner argues that, 
by avoiding sharp falls in NGDP, NGDP targeting would have made the Great Recession far less severe.

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