sumner and jeffrey frankel ( see, for instance, sumner, 2011 and frankel, 2012 ). another variation on this is that the target should instead concern the level of nominal gdp. for a discussion of this and other target definitions that i do not take up here, see andersson and claussen ( 2017 ). 31 inflation is in this case measured according to the so - called gdp deflator. 14 changes in the economy. if, for example, the growth potential declines, it is probable that the neutral real interest rate will fall. but the lower growth potential means that with a nominal growth target one also has a higher implicit inflation target, which in turn should make it easier to attain a negative real interest rate and an expansionary monetary policy in situations when this is needed. the effect would thus be similar to the increase in the inflation target i talked about earlier. 32 a number of disadvantages of having a nominal growth target have also been put forward. one fairly major problem is that nominal gdp is published with a long time lag and revised substantially and often. the fact that the data revisions are substantial is illustrated in figure 2, where you can see that outcome adjustments on a quarterly basis can often be around 1 percentage point and in some cases a lot more than this. in the us data the revisions appear to be somewhat smaller, but even here it is a question of substantial differences between preliminary and adjusted figures. this naturally creates major difficulties for a monetary policy that has a target expressed in this way. another problem is that inflation expectations risk being poorly anchored with a nominal growth target. inflation will probably vary quite substantially and there is no explicit quantified level of inflation that helps to anchor expectations. there is ultimately a risk that this will prompt a deterioration in the conditions for pricesetting and wage formation. this is an important argument, especially in a country like sweden, where instability in wage formation was previously a major problem. finally, some argue that it would be much more difficult to communicate what a target for nominal gdp growth actually entails than it is to communicate a target for inflation. my reflections on amendments to the framework the fact that the different proposals for amendments in the monetary policy framework all have their advocates among well - reputed economists shows that there are advantages and disadvantages with all of them and that none is clearly better than the others. personally, i believe, as i said at the beginning, that one needs to think very carefully before changing the current framework at all.

, and a possible reversal of recent declines in saving rates. if these drags on the growth of spending do materialize, then a lower real interest rate will be needed to sustain aggregate demand and keep the economy near full employment. to be consistent with a lower long - term real rate, the short - term policy rate might have to be lower than it would otherwise be as well. given the global nature of the decline in yields, an explanation less centered on the united states might be required. about a year ago, i offered the thesis that a " global saving glut " - - an excess, at historically normal real interest rates, of desired global saving over desired global investment - - was contributing to the decline in interest rates. 7 in brief, i argued that this shift reflects the confluence of several forces. on the saving side, the factors include rapid growth in high - saving countries on the pacific rim, export - focused economic development strategies that directly or indirectly hold back the growth of domestic demand, and the surge in revenues enjoyed by oil producers. on the investment side, notable factors restraining the global demand for capital include the legacy of the asian financial crisis of the late 1990s, which led to continuing sluggishness in investment in some of those economies, and the slower growth of the workforce in many industrial countries. so long as these factors persist, global equilibrium interest rates ( and, consequently, the neutral policy rate ) will be lower than they otherwise would be. conclusion what conclusion should we draw? clearly, bond prices, like other asset prices, incorporate a great deal of information that is potentially very relevant to policymakers. however, the information is not always easy to extract and - - as in the current situation - - the bottom line for policy appears ambiguous. in particular, to the extent that the recent behavior of long - term rates reflects a declining term premium, the policy rate associated with a given degree of financial stimulus will be higher than usual. but to the extent that long - term rates have been influenced by macroeconomic conditions, including such factors as trends in global saving and investment, the required policy rate will be lower. given this reality, policymakers are well advised to follow two principles familiar to navigators throughout the ages : first, determine your position frequently. second, use as many guides or landmarks as are available. in the context of monetary policy, these principles suggest that policymakers should monitor bond yields carefully in judging the current state of the economy - - but only