Category Monetary policy
Why isn’t NGDP targeting a lefty thing?
I don't have an answer to that question. The politics of NGDP targeting doesn't make any sense to me. I don't understand it at all.
Could the ECB become the central fiscal authority?
There is only one way to save the Euro now. The ECB acts as lender of last resort to the 17 Eurozone governments. But nobody would want to act as lender of last resort to a deadbeat, and the ECB wouldn't want to act as lender of last resort to a fiscal deadbeat. With the […]
What’s the best shape for the AD curve?
Economists usually talk as if the slope of the Aggregate Demand curve were a positive question: what is the slope of the AD curve? I think it's best to treat it as a normative question: what slope of the AD curve ought the central bank choose? That leads us to a simple way to think […]
Existentialism and the non-neutrality of money language
OK, this post is a little on the whimsical side. The argument is a lot less strong and clear than I would like it to be. But sometimes you just have to say what's in your head, and hope that will help it get clearer. Read at your own risk (as if that needed saying). […]
The legal scope of Fed purchases
This is a guest post by JP Koning: Any central bank that wants to be Chuck Norris-like requires the legal authority to purchase a broad array and quantity of assets. Without the legal ability to conduct broad purchases, a central bank’s threat to enforce a new target will lack credibility. The Federal Reserve Act significantly […]
IT vs PLPT vs NGDPLPT for the Bank of Canada
The Bank of Canada's 2% inflation target comes up for renewal every five years, and it's up for renewal now. To my mind, there are only three serious candidates: IT. Inflation Target. Keep the existing 2% Inflation Target (with maybe minor amendments). PLPT. Price Level Path Target. Like inflation targeting, and with the same 2% […]
Greg Ip on NGDP targeting
Greg Ip (once one of our Carleton students, I'm proud to say) is not opposed to NGDP level path targeting. But he is not very enthusiastic about how well it would work. Greg starts with a US anecdote, about a businessman who told Paul Volcker that he didn't think Volcker would succeed in driving inflation […]
Paul Krugman and inflation pessimism
Paul Krugman believes (I'm pretty sure) that the IS curve slopes down. Getting the US economy to a higher equilibrium level of output and employment through monetary policy alone means a real interest rate that is lower than it is now. And since the nominal interest rate can't fall any lower, the only way to […]
Negative natural rates of interest and NGDP targets
My colleague and co-blogger Frances Woolley doesn't do macroeconomics and monetary theory. It's not her cup of tea at all. But when I started to write a response to Steve Waldman's very good post on NGDP targeting, I found myself writing about Frances' also very good post on demographics and saving for retirement. Steve: meet […]
Eurozone to issue yuan bonds???
Worthwhile Canadian Initiative is not normally a blog for very short posts. We try to be a bit more analytical. But there's really not much one can say about this idea reported in the Telegraph, other than: this is really stupid. The whole Eurozone problem is that each Eurozone country was issuing bonds in what […]
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