ABSTRACT
This chapter studies the distinctive characteristics of a stable nominal income. This analysis is presented in terms of the equation of exchange. Of particular interest is the relation between nominal income and price level stability and under which conditions these two objectives are equal to each other. In particular, nominal income targeting distinguishes between good (benign) and bad (malign) inflation and deflation. NGDP Targeting and Hayek’s rule are discussed as two cases of nominal income targeting.
