The Close Connection Between Evan Koenig and Market Monetarism
Evan Koenig - who is a long-time defender of NGDP targeting - is out with a new paper: "All in the Family: The Close Connection Between Nominal-GDP Targeting and the Taylor Rule". Evan of course is a Senior Economist and Vice President at the Dallas Fed. Frankly speaking I have not yet have time to read the paper, but I wanted to share the link with my readers nonetheless. Here is the abstract: "The classic Taylor rule for adjusting the stance of monetary policy is formally a special case of nominal- gross-domestic-product (GDP) targeting. Suitably implemented, moreover, nominal-GDP targeting satisfies the definition of a flexible inflation targeting policy rule. However, nominal-GDP targeting would require more discipline from policymakers than some analysts think is realistic." So what Koeing is basically arguing that we should not see NGDP level targeting as something so fundamentally different from the Taylor rule - at least in relation to Federal Reserve's mandate. I am not sure I totally agree, but I would certainly agree that if a Taylor rule can be said to be within the Fed's mandate so can a NGDP level target. I have two earlier posts relating to NGDP targeting and Fed's mandate: Let the Fed target a Quasi-Real PCE Price Index (QRPCE) NGDP level targeting and the Fed’s mandate I hope I will be able to read all of Evan's paper in the coming days and I highly recommend to read Evan's other papers on NGDP targeting. He has written a few. See here and here. Our friend Bill Woolsey also has great post on on Evan's paper.