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Monday, September 18, 2017

Is Larry Summers a Fan of Nominal GDP Level Targeting?



You are going to have listen to my podcast with him to find out cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 answer. Here is a hint: we spent a portion of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 show talking about NGDP level targeting (NGDPLT) and what it would take to actually get it implemented it at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Federal Reserve. So listen to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 show to find out Larry's thoughts on NGDPLT as well as his views on secular stagnation, Fed policy since cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 crisis, and macroeconomic policymaking in real time. It was a fun interview. 

P.S. You can also read cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 transcript of our interview.
P.P.S. For those interested in NGDPLT here is my latest policy brief on it and here is a longer research paper on it.

9 comments:

  1. Very nice interview.

    I am disappointed that Larry Summers subscribes to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 "housing bubble" view, given that house prices are higher now, and house prices are soaring into cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 stratosphere in Australia, New Zealand, Great Britain, Canada, Hong Kong and parts of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 US.

    Maybe cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 words "property zoning restricted supply" need to used.

    Also, all cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 above nations run trade deficits. There seems to be a strong correlation between trade deficits and exploding house prices, and I think it is a causal relation. Foreign money pours into real estate, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 supply of which is limited by zoning.

    I wish you would have broached cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 topic of helicopter drops, or if QE combined with fiscal deficits (and no plans to reduce Fed balance sheets) is much cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same thing as chopper drops.

    Given Summers views that demand creates supply, and that we have gluts of savings…helicopter drops make sense, no?

    Thanks for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 interview. Great stuff.


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  2. Could you post cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 transcript in anocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r way in addition to using Google drive? Access to that particular storage platform is blocked by most US Government networks. Thanks in advance.

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    1. Anonymous, I moved it to a dropbox file. Let me know if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are still problems.

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    2. How much per hour are cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 taxpayers paying you to read this transcript?

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  3. Hi David. I just wanted to say that I really love cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se podcasts. I have been driving a lot recently and your pods always make cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 journeys go quicker. Thank you!

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  4. Are cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re transcripts for most of your podcasts? I admit I haven't kept up with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m. And being able to read cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 transcripts would make it easier to catch up.

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    1. Not yet, only a few have transcripts.

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    2. David, I think you need to have George on again to talk "The 2% Solution"!

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  5. Great interview. I love your podcasts too. A had a couple thoughts while listening:

    The original thinker on secular stagnation was in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 1930's. This makes me highly suspicious that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 concept is a long term trend. It seems more likely that it matches cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 situation at certain points in time and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n things change again (as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y always do).

    We can always find individual examples (like cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 lawyers using less SF), but it's hard to know where economy has reallocated resources. For instance, Amazon's warehouses are amazing structures. And every farm worker today is using far more capital and land today than each farm worker from 50 years ago.

    Regarding QE, I think he's mistaken. The drop in long term rates after cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 taper indicates to me that it was effective. QE was raising expectations of future nominal GDP growth. When it ended, those expectations fell, taking long term interest rates down with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m. Just like cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first increase in IOR around cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 end of 2015. Then cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 10 year Treasury rate fell like 75 bps or more (if I recall correctly).

    I'm glad he mentioned market inflation expectations being so low. Especially that looking at market expectations is a useful thing to do.

    I thought he had an interesting take on allowing procyclical inflation that will be inadvertently worked off when cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 next recession hits. I think we should be trying for counter-cyclical inflation, but I'm also concerned that it may be difficult to achieve.

    His comments on NGDP are intelligent, except cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 "sum of a good and a bad". I like cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 idea that an NGDP target is kind of a stealth way to raise cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 inflation target. And it obviates cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 need to have an opinion on secular stagnation. Just target NGDP at X%, say 4.5%. If RGDP growth is stuck at 1%, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n we'll defacto have a 3.5% inflation target and if/when RGDP growth returns to a higher level, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 inflation target drops. The trouble with his "sum of a good and a bad" is that for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 most part cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed doesn't control RGDP growth. RGDP will generally find its equilibrium. And if RGDP is falling, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n inflation is not a bad.

    I've often wondered about this. If NGDPLT was ruled out, would we be better off with Price Level Targeting or with an NGDP growth target. I think Summers prefers price level targeting? I think eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r step would be an improvement. My preference would be to move to an NGDP target of some sort though.

    I thought his suggestion to loosen during a suspected bubble was interesting. Provocative even. I'm too EMH to change policy eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r way, but I like it as a counter-argument.


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