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National Drift or Global Mastery

LONDON – As world business leaders gather in Davos, a long-overdue paradigm shift in monetary policy – subordinating the targeting of inflation to the targeting of growth – is slowly taking shape.

In what some call a “reverse Volcker moment,” US Federal Reserve Chairman Ben Bernanke has specified a target of 6.5% unemployment alongside his inflation target; Japan’s new government has proposed a minimum inflation target; and Mark Carney, the next governor of the Bank of England, has argued that “there could not be a more favorable case for nominal GDP targeting.” Meanwhile, China has pledged to double average domestic per capita income by 2020.