tag:blogger.com,1999:blog-8897997766931633186.post333877343721778372..comments2024-02-14T03:21:37.506-05:00Comments on Monetary Freedom: Salter and Hogan on NGDP Level TargetingBill Woolseyhttp://www.blogger.com/profile/06330232724290161369noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8897997766931633186.post-61784459953536291032016-04-18T20:08:42.590-04:002016-04-18T20:08:42.590-04:00It’s tough to say about GDP target level, but we j...It’s tough to say about GDP target level, but we just need to make sure we have proper idea and awareness before doing anything. I am really glad that I trade with OctaFX, it’s all thanks to them that I have been so much comfortable and that’s to do with their rebate program where I am able to gain 50% back on all trading orders which includes the losing trades too, so it’s all really special and allows me to be successful.Arjunnoreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-88424558720811966342014-10-14T09:42:38.182-04:002014-10-14T09:42:38.182-04:00Thanks for the comments, Bill. It's certainly...Thanks for the comments, Bill. It's certainly true that, on the macro level, the asymmetric expectations Thomas and I discuss will result in a given level of NGDP breaking down into more inflation and less real output growth. But to me NGDP targeting only makes sense as an attempt to mimic monetary equilibrium and achieve monetary neutrality. I'm worried that the expectations asymmetry will change the underlying conditions at which the money market would hypothetically clear, and the result would be inflation at the macro level, which is troubling only because the micro-level accompaniment is noise in the price mechanism. Thomas and I are worried that this will have real effects, and permanently lower real income. Whether you buy this depends on what you think about how monetary disequilibrium affects relative prices, neutrality vs. superneutrality in levels vs. growth rates, etc.<br /><br />As to the 1970's, we included it simply as a reminder that the attemp to exploit stable, expectations-insensitive relationships in macro variables is a bad idea. Obviously this is not a good description of what would happen *had there been a rule*, due to the Lucas critique. But that's not the angle we were getting at in that section.<br /><br />Again, thanks for your attention. I hope we can continue debating this!Alex Salterhttps://www.blogger.com/profile/05425418383139682773noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-61084340817504750122014-10-12T21:55:41.175-04:002014-10-12T21:55:41.175-04:00"In my view, the seventies are not very instr... "In my view, the seventies are not very instructive, since that was a period where nominal GDP was not on a stable growth path but rather had an accelerating growth rate."---Woolsey.<br /><br />Excellent blogging.<br /><br />The 1970s are a poor indicator of what would happen with monetary stimulus in the 2010s.<br /><br />Back in the 1970s, a much larger fraction of the private workforce was unionized, and foreign trade was a much smaller component of GDP. <br /><br />In brief, the supply side was domestic in the 1970s, and clogged by regulation and unions. Does anyone remember the regulations of trucking, railroads and airlines? Reg Q? Ma Bell? Airline tickets were regulated by price!<br /><br />Today the supply side is global. How does one generate demand-pull inflation when the supply-side is global? <br /><br />In the 1970s you had a top MTR of 90%, down to 70% at the latter years. There were capital shortages and not capital gluts. This is important, as today when a price signal (and profits) suggests a bottleneck, there is plenty of private-sector capital to apply to the bottleneck. <br /><br />The amount of capital pouring into the energy sector is a sign of that---and a reflection of globalized capital markets, another feature absent from the 1970s. <br /><br />The 1970s were characterized by Big Steel, Big Auto, Big Labor, Big (and clunky) Retailers---all destroyed now. Can Ford raise prices when there is a Kia, Hyundai, BMW, Volkswagen, Toyota, Nissan and Honda on the scene, let alone GM and Chrysler?<br /><br />There are no major manufacturers or retailers today with pricing power (well, maybe Apple, and even then....). <br /><br />Today we have the Wal-Mart global sourcing model, Craigslist and $1 stores.<br /><br />You know what the CPI-U is in Dallas, a region with strong labor markets?<br /><br />1.2% YOY July. And some people say the CPI overstates inflation. <br /><br />Avoiding robust labor markets and growth due to fears of inflation...is not smart monetary policy. <br /><br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.com