New Investment Study Findings Have Been Reported by Investigators at Federal Reserve Bank (Optimal Monetary Policy for the Masses): Investment

2026 MAR 04 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- New research on Investment is the subject of a report. According to news reporting originating in St. Louis, Missouri, by NewsRx journalists, research stated, “We study nominal GDP targeting as optimal monetary policy in a simple and stylized model with a credit market friction. The macroeconomy we study has considerable income inequality, which gives rise to a large private sector credit market.”

The news reporters obtained a quote from the research from Federal Reserve Bank, “This is an important credit market friction because households participating in the credit market use non-state-contingent nominal contracts (NSCNC). We extend previous results in this model by allowing for substantial intra-cohort heterogeneity, which is substantial enough that we can approach measured Gini coefficients for income, financial wealth, and consumption in the U.S. data. We show that nominal GDP targeting continues to characterize optimal monetary policy in this setting. Optimal monetary policy repairs the distortion caused by the credit market friction, thereby leaving heterogeneous households supplying their desired amount of labor, a type of ‘divine coincidence’ result.”

According to the news reporters, the research concluded: “We also further characterize monetary policy in terms of nominal interest rate adjustment.”

This research has been peer-reviewed.

For more information on this research see: Optimal Monetary Policy for the Masses. Federal Reserve Bank of St Louis Review, 2025;107(10):1-23. Federal Reserve Bank of St Louis Review can be contacted at: Federal Reserve Bank St Louis, Box 442, St Louis, MO 63166, USA.

Our news correspondents report that additional information may be obtained by contacting James Bullard, Federal Reserve Bank, St. Louis, MO 63102, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.20955/r.2025.10. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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