Perhaps it's the desperation of the times. Perhaps it's just my own wishful thinking. But the so-called New Monetarists seem to be gaining a lot of credence and I think that is a very good thing.
It's been a long time coming, but I think they fully deserve it, and none too soon. The so-called New Monetarists: Scott Sumner, David Beckworth, Nick Rowe, among others, have been making a lot of sense for a long time. These are the kind of people and the kind of thinking that should be leading the intellectual right.
So let's have the Fed start targeting nominal GDP already.
Update: I briefly commented on this idea almost a year ago. And I've occasionally written about the very similar idea of inflation targeting almost since I started this blog. While I sympathize most with views that we should do both fiscal and monetary stimulus right now, I also think that nominal GDP targeting, if done on a continual basis, might do a lot to prevent future major recessions and generally calm business cycles. In other words, it could greatly reduce and possibly eliminate the need for future fiscal stimulus, which is something you'd think conservatives would broadly support. I'm sure some of them do.
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Nope! New Monetarists is something else entirely - Steve Williamson, Randy Wright. What you are calling new monetarists are really old monetarists - mutton dressed as lamb as my mother would say!
ReplyDelete"I also think that nominal GDP targeting, if done on a continual basis, might do a lot to prevent future major recessions and generally calm business cycles"
ReplyDeleteMy goodness, how many times have we heard this before! Money supply targeting, inflation targeting, Taylor rules, or go really big and have currency union.
Really its silly. None of these policies has ever delivered on its promise and zero reason to expect this will either.
Um, you do know that what we have know is called the New Neoclassical synthesis right?
ReplyDeletehttp://www.aeaweb.org/articles.php?doi=10.1257/mac.1.1.267