Thursday, March 21, 2013

Fed Panel Discussion at the AEI

Friday, I will be participating in a panel discussion on Fed policy at the American Enterprise Institute. Along with me will be Scott Sumner, Ryan Avent, and Jim Pethokoukis. If you are in DC and can make it, I hope to see you there. 

Update: Here is the video of the panel discussion and here is a link to my PowerPoint file.


  1. David
    This is a "rigged" discussion!

  2. Lead the good fight for nominal GDP targets :)

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  4. Like was said in the panel discussion... nominal GDP targeting is really based on getting more money into the economy to allow demand to express more fluidly. I paraphrased a bit. But this is what my research into Effective demand is revealing; There is a shortage of Effective demand constraining the recovery. However, that shortage is a function of the % utilization rates of labor and capital and the effective % of national income going to labor. You can change the amounts of money in the economy, but unless you change the % ratios, you will have no eventual change. The most direct way to raise consumption money and to change the ratios is by raising labor income "share". Trying to feed the same dynamics of the existing ratios with more money may be futile.
    The dynamics of Effective demand relate to % and ratio. So, the new equations I am bringing forward on Effective demand need to be resolved.

  5. I should also add my post about where potential real GDP is according to the equations of Effective demand.

    It is important to really know where potential real GDP is when you start talking about nominal real GDP. and like was said in the video, there is no scientific way to determine potential real GDP. But I have a scientific equation for it, laid out in the post...

    potential real GDP = real GDP - $3000 billion * (cu - els)/els

    $3000 billion is a real $ constant in 2005 dollars for the magnitude of the business cycle.
    cu = capacity utilization
    els = effective labor share, (0.78*labor share: business sector, 2005=100)

  6. My prediction for the panel in a nutshell: