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Last week the Bank of Canada and Canadian government announced - not overly surprising - that it will continue its 2% inflation targeting regime.
A lot of the debate about how to escape the Great Recession is focused on the question of deleveraging and it is often said that we have entered a period of more or less permanent low growth – a “New Normal”. I fundamentally think the idea of the new normal theoretically and empirically flawed.
Steve Roth over at www.asymptosis.com has a comment on my previous post ”Be right for the right reasons”, which in itself was a comment on Richard Williamson who had commented on one of my previous comments (“NGDP targeting is not a Keynesian business cycle policy”) so you might consider this as ponzi-commenting…Anyway, Steve’s comment deserves an answer. He has some intriguing ideas.
Richard Williamson has a comment on my earlier post ”NGDP targeting is not a Keynesian business cycle policy”.
I have come to realize that many when they hear about NGDP targeting think that it is in someway a counter-cyclical policy – a (feedback) rule to stabilize real GDP (RGDP). This is far from the case from case and should instead be seen as a rule to ensure monetary neutrality.
Anybody who has been working on a trading floor will know the adrenalin rush one will experience when one of the major sets of macroeconomic data is published – for example US nonfarm payroll numbers. I think most dealers and analysts will recognise this and will acknowledge that it could become nearly addictive to get that feeling. However, I think that this might be a thing of the past due to the technological development.