Monday, November 9, 2009

Further Readings on Nominal Spending

Given all the interest my figures generated on stabilizing nominal spending as a policy goal, I thought I would follow up with a collection of links to my posts and others on this topic. Let me note up front that stabilizing nominal spending as goal is nothing new and has been promoted in the past by many prominent economists such as Greg Mankiw, Robert Hall, Bennett McCallum, and others in the form of a nominal income targeting rule. It is just that this current crisis has sparked a renewed interest in the idea, at least among some observers.

Here are some blog posts:
(1) Why Care About Nominal Spending?--David Beckworth
(2) More on the Importance of Nominal Spending Shocks--David Beckworth
(3) Why Nominal GDP Matters--Scott Sumner
(4) Recognizing the Nature of the Macro Problem in My Views on Money/Macro--Scott Sumner
(5) Why Current AD Depends on Expected Future AD--Nick Rowe

And here are some accessible academic articles:
(1) Understanding Nominal GDP Targeting--Michael Bradley and Dennis Jansen
(2) Nominal Income Targeting--Greg Mankiw and Robert Hall

There are many other academic articles on nominal income targeting but most are highly technical. If you know of any more introductory or survey-type articles on this topic please let me know.


  1. Mankiw and Hall are very good. I don't like a hybrid policy. Aside from being to complicated, (a growth path for nominal expenditure is easier to understand,) the hybrid poicy requires an estimate of potential income. On the other hand, their simulation showing that output volatility would have been greater with nominal expenditure level targeting that in reality is a bit troubling.

  2. David, I think this is related: I seem to recall you ran some posts a while back about betting on a recession for 2009, maybe it was on Intrade? Anyway, I wondered if you were going to do a follow-up on that. I thought it might be interesting since some people are saying we should set monetary policy by looking at futures markets in nominal GDP