Brad DeLong thinks so.
To me it sounds like they are explicitl stating a 6.5 percent unemployment target and a 2.5 percent inflation target. 6.5 percent seems high as a target (CBO's NAIRU estimate is 5.2, which means the Fed wants to err well on the side of decelerating inflation), but it would be awfully nice to see relative to what we've got now.
The idea that this is considered "state dependent" policy is interesting and depressing to me. The point is that they will keep doing monetary stimulus until they reach that point. So exactly when didn't they have an inflation and unemploymenet target? And if they haven't had one for this long (which really is quite incredible), it makes me worried about how fast they are pursuing this target.
Targets are great, but in and of themselves they're meaningless. What's the reaction function? It's one thing to say you will keep stimulus on until this is achieved, but are you tip-toeing towards it or taking serious action?
Brad thinks this is good news. I see a goal 1.3 percentage points on the wrong side of stable inflation. If the goal is this timid it seems reasonable to me to think the pursuit of the goal is going to be timid as well.
Washington is broken, and not in the way that everyone seems to think. This is all very depressing.
Hopefully I'm wrong and this is a good thing.
Friday Night Music: Quilt at Bowery Ballroom
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