From Scott Sumner: "Long time readers know I strongly disagree with Krugman’s view, as I think the standard model uses inflation where NGDP growth is needed."
As you all know, I think Sumner's take on Krugman and Keynesians generally is wrong. He will not take "yes" for an answer - he hast to be in disagreement with them even when he's not in disagreement.
But that's not what's strange (we get that in almost every Sumner post!).
What's odd that occurred to me hear is the flip-flop that history of thought has done at the very least in Sumner's own perception of things but to a certain extent in real life too.
It used to be that Keynesians cared about NGDP (i.e., national income) while monetarists cared about inflation and the money supply. Now the people that call themselves monetarists will flip out if you even breath a whiff of these old Monetarist concerns (and God help you if you talk about interest rates), and they're the ones focusing relentlessly on the old Keynesian concern about NGDP.
I think in real life this is less pronounced than it is in Sumner's head, but this sentence sort of popped out at me in this regard.
Yes, it is an interesting historical irony indeed, Daniel Kuehn. IIRC, James Meade had an article that discussed nominal income targeting a good several decades before Market Monetarism would become what it is now. This is the article in question I believe.
ReplyDeletehttp://www.jstor.org/stable/2232044
Jeffrey Frankel cited James Meade's article in a piece published at VoxEU.org a little over a year ago.
http://www.voxeu.org/article/inflation-targeting-dead-long-live-nominal-gdp-targeting
Nick Rowe once made a somewhat similar point, which can be tied into your subsequent posts on political camps & macro:
ReplyDeletehttp://worthwhile.typepad.com/worthwhile_canadian_initi/2011/11/why-isnt-ngdp-targeting-a-lefty-thing.html