tag:blogger.com,1999:blog-5713178645208582139.post5707257435362714192..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: A Sharp Expectation Shock is NeededDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5713178645208582139.post-27588087912532292512011-09-03T11:02:47.266-05:002011-09-03T11:02:47.266-05:00This (admittedly unsourced) chart of corporate pro...This (admittedly unsourced) chart of corporate profits to gdp is interesting. 1932 was the trough historical level; 2011 is the peak. Real investment then was profit constrained. The 1933 expectations shock had the effect of lifting both profits and investment. Today, real investment is "future demand" constrained. The implication is that an expectations shock must "transmit&David Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-3867955602360330922011-09-03T09:10:09.168-05:002011-09-03T09:10:09.168-05:00There is no evidence that the fed can achieve a ta...There is no evidence that the fed can achieve a targeted level of NGDP. There is no evidence that if the fed achieves this target it will restore the economy to health rather than destabilize it. <br /><br />Under the current microeconomic policy mix, there is less slack in the economy than many economists think. <br /><br />This is not the 1930s. The fed has much less influence over money, Charleshttps://www.blogger.com/profile/00607057013050715435noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-50001137500821176742011-09-02T16:14:56.750-05:002011-09-02T16:14:56.750-05:00Excellent blog. I think Beckworth also contribute...Excellent blog. I think Beckworth also contributed to the public's increasing acceptance of NGDP and QE.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-31578113752749652702011-09-01T13:44:41.192-05:002011-09-01T13:44:41.192-05:00Bill,
I don't think Woodford meant that all o...Bill,<br /><br />I don't think Woodford meant that all of the increase in the monetary base should be permanent, only that some of if should be. He is for a price level target after all.<br /><br />I think his point is that if the public knows that in the future most of the base created will be pulled out like with Japan then there will be no permanent increase in the price level. On the David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-57227956657759010372011-09-01T13:40:21.500-05:002011-09-01T13:40:21.500-05:00JDTapp,
Yes, it would be better if we had a NGDP ...JDTapp,<br /><br />Yes, it would be better if we had a NGDP futures market. We have to start somewhere though.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-68081904186271013822011-09-01T06:17:43.611-05:002011-09-01T06:17:43.611-05:00I understand Woodford's point about committing...I understand Woodford's point about committing to a higher level of base money, but I think it is wrongheaded.<br /><br />I think that if the Fed cut base money by 60% over the next month, and then committed to keeping it at that low level, it would be expansionary.<br /><br />In fact, I support quantitative easing, but there should be no suggesting that the resulting increase in base money Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-13285365393049642152011-09-01T03:42:37.282-05:002011-09-01T03:42:37.282-05:00Yes, I agree with the idea of a positive shock. Ba...Yes, I agree with the idea of a positive shock. Back to older time, when confidence was well stablished, is nor easy. But only when confidence will be restablished the demand for money would be normal and stable. <br />For me the most important is to rise inflation expectative, that is the key to acelerate the deleveraging process. This process is not short, so we need some years of nomibal www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-45312089307918062192011-08-31T21:20:14.822-05:002011-08-31T21:20:14.822-05:00I'm reading Selgin's Theory right now whic...I'm reading Selgin's Theory right now which boils down a basic question: How does a central bank decide how fast it should grow the money supply? It has to speculate, just as an entrepreneur does, about future prices and such. <br />It seems to me that a level target is still inferior to a futures target, since at the FOMC meeting the data would still be backward-looking. The Fed can Justin D. Tapphttps://www.blogger.com/profile/12618278252714742391noreply@blogger.com