There is something else. Whether we like it or not, policymakers are not indifferent to the composition of NGDP.Read it at MacroMania
Adopting a NGDP target implies that policymakers can commit to (say) a 5% NGDP growth rate. But what if inflation turns out to be 4% and RDGP growth turns out to be 1%? (Or how about 7% inflation and -2% RGDP growth?) A credible NGDP target implies that policymakers remain committed to the 5% NGDP growth rate. But ask yourself this: Do you really believe that policymakers would leave policy unchanged in this circumstance?
A reply to David Beckworth
by David Andolfatto | Vice President, Federal Reserve Bank of St. Louis, or of the Federal Reserve System
(h/t Mark Thoma)
(h/t Mark Thoma)
Did David Andolfatto read Rogue Economist's "rant," I wonder?
1 comment:
Thanks God some people still have some brain cells.
Even if they had legs and arms, which they don't, there is no reason why they should do it. For all I know people who wants NGDP is people who only cares about asset appreciation (be them equities, real estate or whatever), they don't really care about real wealth creation, investment and production.
Off course bankers and their economist muppets will want NGDP, they only care about their pocket, not about the real economy and people on food staples.
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