Wednesday, October 19, 2011

The Role of the Economics Blogosphere

Just a few days ago someone in the comment section of this blog was deriding the fact that Market Monetarist had largely emerged in the blogosphere.  How could they be taken seriously without publishing their ideas in top academic journals, this person wondered.  To make their point, the commentator questioned who will be better remembered in the future, the recent nobel laureate Chris Sims or Scott Sumner.  I replied that Sims will be remembered for his important methodological contributions.  But when it comes to shaping the broader debate about monetary policy's role in this current crisis Scott Sumner will be far better remembered.  As Paul Krugman recently noted, the blogosphere is changing how national conversations about economic issues gets shaped.  This reality was highlighted today by this Business Insider piece:
Over the weekend, Goldman came out with a report calling on the Fed to embrace Nominal GDP targeting: In other words, set as a goal for the economy that nominal GDP that we saw back in 2007, and then produce enough inflation so that we got there.

Now Bernanke is out with a new speech about monetary policy in the post-Great Recession era, and though he doesn't say that much substantive, he does talk more about trying to more clearly express monetary policy goals.

According to PIMCO's Bill Gross, that's code for... targeting Nominal GDP.  Meanwhile, Chicago Fed President Charles Evans has been making similar comments, about weighting the Fed's mandate much more towards the full employment/growth end of the spectrum, even if it means high inflation.

All of which means you should really be reading the work of Bentley Economist Scott Sumner, who has been writing forever about the benefits of Nominal GDP targeting, and who is sure to be the hottest economist in the world, as this takes off.
Academic research will always be important.  But the blogosphere seems to increasingly important for real-time discussions of important economic issues.  Scott Sumner is a testament to this development.

3 comments:

  1. The monetarists now see inflation as the way out. To such are you reduced when recognizing the more potent remedy requires accepting what you have long denied.

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  2. I just read the Bernanke speech and I think its a bit of a stretch on Gross' part to see it as a coded message about nominal GDP targeting.

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  3. Thanks David, And you deserve equal credit for all your work.

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