tag:blogger.com,1999:blog-5713178645208582139.post4857452193919890944..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: A Bombshell in the FOMC MinutesDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-5713178645208582139.post-59319588118722195762010-10-14T16:57:51.491-05:002010-10-14T16:57:51.491-05:00DB: Yes, if you're talking about QE2: One of t...DB: Yes, if you're talking about QE2: One of the most convincing things in all of econ history is the graph in Eichengreen that shows a country's recovery in the 1930s coincides with its jettison of the Gold Standard.<br />So yes monetary policy can have a powerful one time effect. But we need to consider that was an expectations shattering event precisely because it was against the grainecbnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-31317950497521323682010-10-14T16:38:35.261-05:002010-10-14T16:38:35.261-05:00I would question whether these ideas should be tak...I would question whether these ideas should be taken so seriously. For reasons good or bad, the Fed wants to ease more aggressively, but the inflation mandate makes that awkward, so they look for something else that gives them cover for doing what they want. Do you think that the Fed would stick to a price level target if it meant a period of unpopular restriction to unwind an inflationary RebelEconomisthttps://www.blogger.com/profile/13241098878248190971noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-666774941473462862010-10-14T13:43:12.031-05:002010-10-14T13:43:12.031-05:00Richard A:
Maybe we can learn if Bernanke was one...Richard A:<br /><br />Maybe we can learn if Bernanke was one of them from his Friday speech.<br /><br />David Pearson:<br /><br />I think Eggertson's key point is that expectations matter. I agree. If the Fed would state an explicit NGDP level target and declare it would do whatever is needed to maintain it, such language would change expectations and require fewer asset purchases than would David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-10237922397889444672010-10-14T12:42:03.041-05:002010-10-14T12:42:03.041-05:00We're looking at politics influencing economic...We're looking at politics influencing economic decisions right now, that's all.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-17943220630441637732010-10-14T08:47:46.808-05:002010-10-14T08:47:46.808-05:00Paul Kasriel,
NGDP target will be achieved because...Paul Kasriel,<br />NGDP target will be achieved because economic agents will know that the Fed will set the interest rates and money supply to the levels consistent with the desired NGDP level path.<br />At this time nobody knows what criteria the Fed is using when it sets the size of Fed's balance sheet and when it determines the time interest rates will be increased.The Money Demand Blog - 123http://themoneydemand.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-56548980934754963212010-10-13T19:59:29.770-05:002010-10-13T19:59:29.770-05:00David, I do hope you took Paul Kasriel's comme...David, I do hope you took Paul Kasriel's comment to heart. There is no thing except a very loose connection,working through unpredictable expectational effects, with long and variable lags,between any Fed instrument and nominal GDP.<br />You are dangerously ignoring the Hayekian warnings of pretense of knowledge I fear.<br />Of course, in a vacuum such as we are in now, where nobody has a ecbnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-23933940734171922282010-10-13T14:04:34.901-05:002010-10-13T14:04:34.901-05:00David,
I understand from Bloomberg that Eggerston...David,<br /><br />I understand from Bloomberg that Eggerston attended the Sept. FOMC meeting. I wonder if he gave a presentation on targeting...<br /><br />Reading his 2003 paper, it seems that his main messages are, "QE has little direct effect, even if the central bank buys risk assets." And so, "do more targeting, less volume of bond purchases." Do I have this right?<br David Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-1192604178466604372010-10-13T13:56:50.734-05:002010-10-13T13:56:50.734-05:00If a general gives the command to her troops to &q...If a general gives the command to her troops to "take that hill," but does not have any idea how the hill should be taken, in all likelihood, it will not be taken. If the Fed decides to target nominal GDP but does not know how to achieve its target, in all likelihhod, its target will not be achieved. It is not clear to me the Fed knows how to achieve a nominal GDP level or growth rate.<Paul Kasrielnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-35732632852944066322010-10-13T12:09:02.847-05:002010-10-13T12:09:02.847-05:00Excellent commentary. Keep up the good work.Excellent commentary. Keep up the good work.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-21317728250978221162010-10-12T22:17:59.136-05:002010-10-12T22:17:59.136-05:00sdwinkler:
A price level target has "memory&...sdwinkler:<br /><br />A price level target has "memory" while an inflation target does not. Thus, if the Fed has a price level target and it falls beneath its target it will create enough extra inflation to catch up with the target and vice versa. On the other hand, if the Fed has an inflation target and it falls beneath the inflation target for a period there is no subsequent catch up David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-55927526011898237022010-10-12T19:28:49.603-05:002010-10-12T19:28:49.603-05:00What is the significance of the Fed calling out th...What is the significance of the Fed calling out the difference between "targeting a path for the price level" and targeting"the rate of inflation"? <br /><br />And is there any significance that they said they'd target "...a path for the level of nominal GDP" but didn't speak about the rate of GDP growth?sdwinklerhttps://www.blogger.com/profile/02988634725858754675noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-29462263258930037362010-10-12T17:03:14.021-05:002010-10-12T17:03:14.021-05:00"Unfortunately, we will have to wait until th..."Unfortunately, we will have to wait until the transcripts are released in six years from now to learn who actually was discussing NGDP level targeting."<br /><br />Meanwhile, we can play a guessing game on who in the FOMC is promoting this view.Richard A.noreply@blogger.com