As central banks navigate structural shifts and low interest rate environments, macroeconomists propose Nominal GDP (NGDP) Targeting as an alternative to traditional inflation targeting. [1, 2]

An NGDP targeting framework requires the policy committee to target the total dollar value of economic output, combining real GDP growth and actual inflation into a single numeric target:

Nominal GDP Target = Real Economic Growth + Consumer Price Inflation

Unlike inflation targeting, which ignores past misses, NGDP targeting uses Level Targeting. If a severe crisis causes economic output to drop below the target trendline, the central bank is legally required to run an accommodative policy, allowing higher inflation or faster growth for a period to return the economy to its long-term target path