That's a good question. In the case of Britain, I think there's a fairly general understanding that Britain needs more stimulus right now. The economy is very weak and the problem the Bank of England has is there's a desire to provide it but it feels very uncomfortable with the fact that it would be violating the inflation mandate. So it's sort of dancing around the issue a little bit but it's not moving as aggressively as it would like, in my view, because of the inflation mandate.
In terms of stagflation, monetary policy can't really solve long-term real growth problems, but I think what it can do is provide better performance when there's a temporary supply shock or productivity issue. In the case of long-term growth, just to react a little to what Chris and David said, there is a problem if there are demographic changes. One way of addressing that is to use nominal GDP per capita or even for the working age population. That's more likely to give you better results, because what really matters is nominal output per worker or potential worker in the economy, which you want to keep as stable as possible.
When there's a sort of supply problem, if you have inflation targeting, you're forcing all the adjustment on wages, and wages don't tend to be very flexible, so you tend to get fluctuations in employment. With nominal GDP targeting you allow some variation in inflation, which helps provide equilibrium in the labour market. It's going to provide a little bit better performance in terms of jobs, again without changing your long-term rate of inflation.
Now, given all the discussion revolving around the recession, people tend to think of nominal GDP targeting as being more expansionary than inflation targeting or perhaps allowing inflation to get out of control in some sense, but I think that's very misleading. In the long run, you're going to get the same inflation rate. It's also true that during boom periods, such as the American housing boom, you probably have a little tighter monetary policy. So the long-term inflation rate won't differ, and I would argue it's really the long-term inflation rate that you want anchored, not the year-to-year variation.