I argued 25 years ago for real interest rate targeting, with fiscal policy taking on the job of macro stabilisation. It wasn't super-relevant in the following decade of low and stable inflation, and I haven't reconsidered the issue properly
Real would be better than nominal, but I can't see why any relative price would be a good target. I think the target should be about something that is intrinsically good, like inflation or NGDP that maximizes income.
I argued 25 years ago for real interest rate targeting, with fiscal policy taking on the job of macro stabilisation. It wasn't super-relevant in the following decade of low and stable inflation, and I haven't reconsidered the issue properly
Real would be better than nominal, but I can't see why any relative price would be a good target. I think the target should be about something that is intrinsically good, like inflation or NGDP that maximizes income.
Price stability is generally good, so policies that involve arbitrary shifts in relative prices are not.