Group of 20 policy makers discussed a broad rethinking of monetary tools at their meeting in Moscow last week, including strategies to support growth by targeting nominal gross domestic product, Russia’s envoy to the G-20 said.
A proposal for the monetary authorities to adopt a target of nominal GDP, aired by Bank of England Governor-designate Mark Carney in December, was discussed on the sidelines of the G-20 meetings, said Russia’s G-20 sherpa, Ksenia Yudaeva. Russia holds the group’s rotating presidency this year.
“Maybe it’s an appropriate instrument for developed countries with reserve currencies, but for developing and small economies, it absolutely doesn’t answer their problems,” Yudaeva said in an interview in Moscow. “Inflation is more or less fine; even in Russia we can collect it on a weekly basis. Nominal GDP is published with big lags and big revisions.”
Officials in the U.K. have begun debating the need for a change in the system established in 1992, suggesting nominal GDP as a better target to give Carney and the central bank’s Monetary Policy Committee more scope to support growth. The introduction of a new mandate is a “very pretty concept, though in practice it’s entirely inoperable,” according to Yudaeva, a 42-year-old with a PhD in economics from the Massachusetts Institute of Technology who was previously a chief economist at OAO Sberbank (SBER), Russia’s biggest lender.
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