Sunday, October 30, 2011

The Triumph of NGDP Level Targeting

I've been busy with too many things to blog.  My more fluid thoughts are found on Twitter or on Google Plus. But a significant event has been the triumph of Scott Sumner's years-long push to get NGDP targeting on the forefront of discussions of optimal monetary policy, which I've commented on several times here.  I started incorporating ideas from Sumner's posts in my Macro, International, and Money & Banking classes two years ago. Two weeks ago, Goldman Sachs' economists published a paper advocating the Fed to adopt the target, and since then several news outlets have picked up the story as other economists have jumped on the wagon publicly.  Many of the relevant links are on David Beckworth's post today, he also deserves a good deal of credit for being a "market monetarist" pioneer, and he's taught me as much via his blog as the other market monetarists have.

It's truly a bipartisan affair.  Obama's former CEA Chairwoman, Christina Romer, Brad DeLong and Paul Krugman on the Left.  Mitt Romney's economic adviser-- Greg Mankiw-- Robert Hall, and Scott Sumner on the Right.  That's partly why the Fed was made to be independent-- it's not beholden to political whims and wrangling like Congress is. There are theoretically no political constraints to it adopting Pareto-optimal monetary policy.

No comments: