The blogosphere has gone mad with NGDP targeting

The idea is not new. It has been advocated in the past. But in the current crisis it has been receiving a cult following mainly thanks to the blogosphere. It slowly started at the beginning of this crisis and now is reaching its climax. I am talking of course about the Nominal GDP targeting (level or growth rate). It seems that everyone (at least some of the blogs I read) is supporting the idea. I have my own doubts about this particular monetary regime, mainly as I think that it is asymmetric, backward looking and not as transparent as flexible inflation targeting. But, it is an important subject for the future of monetary policy and it deserves attention.

Here few links to the people supporting the idea.

Money Illusion



Pragmatic Capitalism

Bill Mitchell

The Economist







6 thoughts on “The blogosphere has gone mad with NGDP targeting

  1. It’s very popular now because many people see it as a more effective way to make up for the shortfall in aggregate demand after the near zero or even subzero inflation rates in 2009/2010, despite the use of all other monetary and fiscal policy instrumnets. It’s not a revolution in monetary policy, but more of an adaptation.

  2. That’s one of my problems. To me it looks like a fancy excuse further fiscal and monetary stimulus. Before the crisis the myth going around the world was:productivity shocks and new technology will allow us to keep on growing. Today the myth is: loose monetary policy for extensive periods of time together with high deficits are not inflationary.
    Well,will see about that.

    1. In today’s post about the IMF forecasting, you say that you see tax cuts as the way out, for Romania, at least. Aren’t you then, also, advocating fiscal stimulus? 🙂

      1. @Florin Bejan
        Very nice catch. But if you read my entire idea in “Romania needs plan b, if such plan exists” you will see that I also advocate cutting the number of employees in half over the next 5 years. I just did not repeat it here. You do not let me get a way with anything I see. Thanks

        However, is cutting taxes permanently a fiscal stimulus? Of course if one government can credibly make such a claim.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s