Okay, so Greg Mankiw will not be Fed chairman after all and usher in a golden era of nominal GDP targeting. All hope is not lost, though, on the nominal GDP targeting front. Here is the Cynthia Lin of the WSJ:
President Barack Obama‘s re-election has made markets more confident that the Federal Reserve will continue on its current path.
With Obama winning a second term, the odds are higher that any leadership change at the central bank will follow in Chairman Ben Bernanke‘s footsteps. The path of Fed policy now seems clearer to the market, as evidenced in the fed-funds futures market.
November 2014 fed-funds futures now price in no chance of an interest-rate increase by then, compared with a 24% chance priced in at Tuesday settlement. The central bank has said it plans to keep rates near zero at least until mid-2015. But Bernanke’s current term ends in 2014, and some had speculated that a Romney administration would have appointed a Fed chairman who would push for higher rates sooner
So the Fed has less to worry about it as it executes QE3. To the extent QE3 is a step in the direction of the Fed adopting an explicit nominal GDP level target, this would be a positive development. President Obama also has an opening to fill at the Board of Governors and he could reinforce the Fed's move toward a nominal GDP target by appointing someone who endorses it. How about his best friend at Goldman Sachs, Chief Economist Jan Hatzius? He would be a nice complement to the Baord of Governors.