Last time we noted the following regarding thinking about NGDP level targeting: To understand what is going on we need to ask what expectations are being “set”, what is the “target” and how do these reflect what a central bank can “do”? Expectations: We know they can be adaptive (backward looking) or rational (forward looking), […]
Thanks to Dr. Kirdan Lees for prompting me to write today’s post. Today’s topic of discussion is nominal income targeting. What is nominal income targeting? Nominal income targeting is usually viewed as an alternative monetary strategy to inflation targeting, and has never explicitly been applied in practice by any central bank. However, there is an […]
Randomized control trial (RTC) studies are getting more and more attention among policymakers in the last few decades. In addition, the RCT is one of the core experimental methodologies used by the recent nobel prize laureates in economics Duflo, Kremer and Banerjee. Given the excitement around these methods, Chicago University has recently run the IGM […]
Olivier Blanchard’s recent speech at the Brookings Institution event “What’s (not) up with inflation?” encouraged me to write this post. Blanchard is still my second favourite economist (after Matt Nolan of course 🙂 ). But despite that I felt that some of the important elements of the discussion was missing, and I didn’t fully agree with some of Blanchard’s arguments […]
Former Fed Chair Janet Yellen has recently suggested it is a good time to run the US economy hot (in the short-run) underpinned by the argument that the further fall in unemployment rate didn’t drag the inflation up. The justification behind this is that the Phillips curve appears to have become quite flat. As a result, stronger […]
Last week I discussed GDP-B and its potential impact on monetary policy. The main takeaway was that, if GDP-B led to a higher production figure it didn’t necessarily mean that monetary policy needed to be tighter or looser – instead it is changes in prices and inflation expectations that remain key. However, there is a […]