OK, but what would you do operationally to hit the NGDP-LT target? Since it declared its 2.00% year-over-year PCE inflation target in January 2012, the Fed has come within +/- 10% of its target during only 10 of the 147 months. This is actually what I would expect from a Fed Funds targeting approach, but what would you do to more accurately hit your NGDP-LT?
Are you saying that NGDPLT targeting in the US in 2008-20 would have prevented inflation from fallen below target or fallen by less?
NGDPLT keeps inflation on target better than inflation targeting when the Fed does not in fact DWIT to keep inflation on target? Maybe so as historical counterfactual but compared to DWIT IT?
I think I must be missing something about your argument. :(
It seems to me that FAIT is superior to NGDPLT in a negative shock
NGDPLT does what it takes to hold NGDP constant (on target ?) which implies increasing inflation but no guarantee that some markets may still not clear =falling real GDP.
FAIT aims to engineer/permit enough inflation to facilitate that all markets clear, which if successful prevents real GDP from falling but with more inflation = NGDP rises. [This is my understanding of early 2021.]
The latter seem like a better outcome. Or do I misunderstand how NGDPLT works?
The Great Moderation was due to the impoundment of monetary savings in the payment's system.
I.e., whereas velocity was 2/3 of AD during the U.S. Golden Age in Capitalism, the DIDMCA of March 31st, 1980, reduced velocity.
The FED could have targeted total reserves, or targeted roc's in bank debits. Either there's a conspiracy or the FED's Ph.Ds. are dumb as a rock.
OK, but what would you do operationally to hit the NGDP-LT target? Since it declared its 2.00% year-over-year PCE inflation target in January 2012, the Fed has come within +/- 10% of its target during only 10 of the 147 months. This is actually what I would expect from a Fed Funds targeting approach, but what would you do to more accurately hit your NGDP-LT?
Are you saying that NGDPLT targeting in the US in 2008-20 would have prevented inflation from fallen below target or fallen by less?
NGDPLT keeps inflation on target better than inflation targeting when the Fed does not in fact DWIT to keep inflation on target? Maybe so as historical counterfactual but compared to DWIT IT?
I think I must be missing something about your argument. :(
It seems to me that FAIT is superior to NGDPLT in a negative shock
NGDPLT does what it takes to hold NGDP constant (on target ?) which implies increasing inflation but no guarantee that some markets may still not clear =falling real GDP.
FAIT aims to engineer/permit enough inflation to facilitate that all markets clear, which if successful prevents real GDP from falling but with more inflation = NGDP rises. [This is my understanding of early 2021.]
The latter seem like a better outcome. Or do I misunderstand how NGDPLT works?
I don´t believe it is:
https://marcusnunes.substack.com/p/is-the-new-monetary-policy-framework