tag:blogger.com,1999:blog-5713178645208582139.post2122755142150293943..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Do Changes in Potential Output and Data Revisions Make NGDP Targeting Impractical?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5713178645208582139.post-63230004418960978022018-01-16T12:48:26.107-06:002018-01-16T12:48:26.107-06:00Sumner is far better qualified at explaining this,...Sumner is far better qualified at explaining this, but the NGDP futures market would be complemented by the Fed's commitment to buy or sell bonds if the futures market is above or below target. Professor Farmer would go one step further and commit the Fed to buy or sell equities. Beckworth knows about Farmer's idea because I listened to Beckworth's podcast of Farmer (which, like all raywardnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-14138044851187744042018-01-14T13:33:26.162-06:002018-01-14T13:33:26.162-06:00Suppose we have stable NGDP growth and also 20% un...Suppose we have stable NGDP growth and also 20% unemployment. You seem to be assuming that in that scenario, some alternate monetary policy that led to even higher NGDP growth would also result in increased employment. Why do you think that? Why would (say) 10% NGDP growth clear the labor markets whereas 5% NGDP growth wouldn't?<br /><br />Generally, labor markets fail to clear for two Kenneth Dudahttps://www.blogger.com/profile/10593455504357461005noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-84555500208864697962018-01-14T13:18:56.120-06:002018-01-14T13:18:56.120-06:00Great post David. NGDPLT would be such a huge imp...Great post David. NGDPLT would be such a huge improvement over inflation targeting. Kenneth Dudahttps://www.blogger.com/profile/10593455504357461005noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-29730304130361527472018-01-14T12:23:39.028-06:002018-01-14T12:23:39.028-06:00A 5% NGDPLT might have cooled inflation in the 197...A 5% NGDPLT might have cooled inflation in the 1970s, but does anyone want to guess what the unemployment rate would have been in that regime? In the 1970s there were times when both the unemployment rate and the NGDP growth rate were above 10%. What happens when NGDP is 5% in such a scenario? 15% unemployment? 20% unemployment? <br /><br />"Oh, but we will never find ourselves in that Matthewhttps://www.blogger.com/profile/13164097367747326725noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-14256669314990301702018-01-14T11:37:42.437-06:002018-01-14T11:37:42.437-06:00I'm not an expert but GDP makes me uneasy beca...I'm not an expert but GDP makes me uneasy because even after revision, is it really reliable? You have to record every single transaction in the economy to get a good number. Even ignoring the problems of big brotherism implied in getting good quality data, there could be large variations in the size of the informal or illegal economy caused by say, changes in technology, skewing the data. Benoit Essiambrehttps://www.blogger.com/profile/09777196965771952105noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-6684289830472724642018-01-14T11:17:28.439-06:002018-01-14T11:17:28.439-06:00Yes, NGDP futures contracts is another solution. G...Yes, NGDP futures contracts is another solution. Good point. David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-742105104055009302018-01-14T10:50:24.418-06:002018-01-14T10:50:24.418-06:00These two issues have been the biggest thing that ...These two issues have been the biggest thing that kept me hesitant on NGDPLT. I think I've resolved them in my own head. On 1) all you have to do is have a RGDP futures market and every 5 years or so adjust the NGDP target growth rate based on the long-run RGDP assumption. On 2) you just need to make sure the NGDP futures are written in a way to be as agnostic to revisions as possible. Johnhttps://www.blogger.com/profile/01457388998903348000noreply@blogger.com