Simon Wren-Lewis has been discussing some of the ideas about NGDP targeting, and has reached his (tentative) conclusion:
My proposal is therefore the adoption of a target path for the level of NGDP that monetary policy can use as a guide to efficiently achieving either the dual mandate, or the inflation target if we are stuck with that. NGDP would not replace the ultimate objectives of monetary policy, and policymakers would not be obliged to try and hit that reference path come what may, but this path for NGDP would become their starting point for judging policy, and if policy did not move in the way indicated by that path they would have to explain why.
His proposal and his logic for getting there are things I all agree with. Note for New Zealanders – we still have a positive cash rate and a flexible inflation target, so we wouldn’t need to adopt it as an intermediate target right now. But it is a good issue to think about in case we ever get there 😉