So, when are you going to write the PhD thesis showing it?

[Not meant as snark, meant as – you really should be getting your letters, this could be part of it]

 If the TOT had fallen, the RBNZ would have responded more sharply even if inflation expectations were completely anchored in a flexible inflation targeting framework methinks.  Not as much as with an NGDP target to be sure – however a drop in the TOT can also be seen as a negative supply shock, so we “shouldn’t” be looking to return to our old trend.

 Yeah, I’ll tell you my intuition.

NGDP rate forecast targeting is essential a Taylor rule with equal weights on output and inflation.  Flexible inflation targeting is equivalent to a Taylor rule with weights that are estimated to maximise welfare.  In this way, I can’t see the current system being worse – and I can see it being better.

However, that is just my current intuition – I’m not saying that I can’t be swayed 🙂

A counterargument is that the leading US/Euro proponents of NGDP targeting have generally not advocated NGDP targeting for small open economies.

Ah, cool. Would also need to think harder about NGDP rate vs our current system. 

 Yar that is why I said:

“However, even in this case we may decide that nominal income growth is a
better target than price growth – that is an issue I’d like to spend
more time thinking about.”

Where NGDP growth is really nominal income growth afterall.  I should have probably written NGDP instead of nominal income there to be consistent through the post.