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I am sitting in Copenhagen airport waiting for a flight to Dublin, but to be frank I am thinking a bit more about the Czech economy today than about the Irish economy. The reason is that the Czech central bank (CNB) today will have it's monthly board meeting and the CNB board might (fingers crossed) finally act to steer away the Czech economy from the present deflationary path by finally starting to use the exchange rate channel to ease monetary policy.
Alex Salter just sent me his latest working paper "Not All NGDP is Created Equal: A Critique of Market Monetarism". I haven't read the entire paper yet, but Alex is always writing interesting stuff - including as a guest blogger at this blog - so I want to share it with my readers already.
As a Market Montarist it is hard not to be quite excited these days. In the US the Federal Reserve after four years of utter failure is finally moving in the direction of a rule-based monetary policy and necessary monetary easing and even better in the UK there is a real debate about NGDP level targeting that might well lead to some form of NGDP level targeting being implemented (fingers crossed...)
It is hard not getting just a bit excited about the discussions getting under way in the UK after the coming Bank of England governor Mark Carney basically has endorsed NGDP level targeting. So far the UK government has not given its view on the matter, but it is pretty clear that UK policy makers are aware of the issues. That is good news and today we got a "reply" from the UK government to Carney's (near) endorsement of NGDP targeting in the form of comments from UK Chancellor George Osborne.
Here is Mark Carney present governor of Bank of Canada and the next governor of Bank of England:
In my recent post on how the central banks of Australia, Poland and Sweden should have a look at Bennett McCallum's MC rule I briefly mentioned how Richmond fed president Al Broaddus already back in 2003 warned that the Federal Reserve should have a plan for how to conduct monetary policy at the the "Zero Lower Bound". It was of course Bob Hetzel's brilliant book on the Great Recession that inspired me. In his book Bob quotes Broaddus' comments at the June 24-25 2003 FOMC meeting.
Sweden, Poland and Australia all managed the shock from the outbreak of Great Recession quite well and all three countries recovered relatively fast from the initial shock. That meant that nominal GDP nearly was brought back to the pre-crisis trend in all three countries and as a result financial distress and debt problems were to a large extent avoided.
I am writing this while having a small break between meetings and interviews in Reykjavik. It has been a great day, but also a busy day in Iceland's capital for me. Today's meetings and talks have been educational for me and it had made me think about a lot of issues regarding the Icelandic economy. I always find that meetings "on the ground" educate me about the economies I am analyzing rather than just looking a the numbers.