Tagged: Monetary economics

Inflation stickiness, demand, and judging the success of monetary policy - The Dismal Science

Matt Nolan Jan 30, 2013

I am still a fan of flexible inflation targeting.  I agree with Nick Rowe that explicit inflation targeting has made inflation outcomes “stickier” – and that knowing inflation is in a range of the inflation target is therefore insufficient for telling if the central bank is truly achieving “socially optimal policy”. For all the time [...] … Read More

Menzie Chen on currency wars - The Dismal Science

Matt Nolan Jan 30, 2013

You know I don’t believe that the “currency war” is a negative thing in a world of insufficient demand (*,*,*,*,*).  But Menzie Chen from Econbrowser has the same view – and to be absolutely honest their view is significantly more reputable than mine .  Furthermore, it was a point that Chen made all the way [...] … Read More

A hypothetical chat – exchange rate overvaluation - The Dismal Science

Matt Nolan Jan 28, 2013

With people in NZ constantly yelling about the dollar, and yelling at the Reserve Bank, I thought I would host a hypothetical discussion that hopefully helps to explain the issues – and why inflation targeting isn’t the cause of any of the perceived problems.  Here it goes: Intelligent non-economist (INE):  The dollar is too high, [...] … Read More

The currency “war” myth that won’t die - The Dismal Science

Matt Nolan Jan 23, 2013

Over on Rate’s Blog I’ve seen an approving link to an article discussing the “currency wars” that are going on around the world. As Lars Christensen says here, and as we’ve said on many occassions ourselves given that monetary policy is pegged to an implicit inflation target this isn’t “beggar thy neighbour” policy at all [...] … Read More

Carney endorses NGDP level targeting! - The Dismal Science

James Zuccollo Dec 12, 2012

Mark Carney’s speech last night: For example, adopting a nominal GDP (NGDP)-level target could in many respects be more powerful than employing thresholds under flexible inflation targeting. This is because doing so would add “history dependence” to monetary policy. Under NGDP targeting, bygones are not bygones and the central bank is compelled to make up [...] … Read More

Why cyclical Kiwisaver would be an awful tool - The Dismal Science

Matt Nolan Dec 11, 2012

Via Rates blog I see that, at the conference on government finances over the past couple of days Michael Cullen suggested making compulsory Kiwisaver contributions pro-cyclical (combined with the scheme becoming universal) as a monetary policy tool.  I appreciate he wanted the auidence of academics there to think outside the box, but this is actually a [...] … Read More