All through the “Great Moderation” we couldn´t be certain of what the Fed was targeting. It didn´t have an explicit target for anything, be it inflation, the price level or nominal spending (NGDP). The Bank of Canada on the other hand had a clear explicit mandate: Target CPI inflation at 2%.
But during a period of almost two decades you couldn´t tell if the Bank of Canada was targeting inflation, the price level or NGDP. All these were observationally equivalent. In fact, in the case of the BoC we became sure that he was not targeting NGDP only when the crisis hit, but you still could think it was targeting either inflation or the price level. The chart illustrates.
In the case of the Fed, the same ‘doubts’ are true, even more so because, differently from the BoC, the Fed had no explicit target. The illustration below gives you a good idea about the ‘dangers’ associated with either inflation or price level targeting, and how NGDP targeting looks like a much better proposition.