Macro Musings with David Beckworth
The Fed Framework Review: Macro Musings’ Greatest NGDP Targeting Hits
Jan 27, 2025
Evan Koenig, a former senior advisor at the Dallas Fed, delves into the fundamentals of nominal GDP targeting, including its PCE version. George Selgin responds to Chair Powell’s concerns, emphasizing how this framework can effectively manage supply shocks. They discuss the implications of NGDP targeting for economic stability, accountability in central banking, and highlight the importance of adapting monetary policy to real-time market expectations. This insightful conversation showcases diverse perspectives on the future of economic policy.
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Quick takeaways
- The podcast highlights the Federal Reserve's consideration of nominal GDP targeting to stabilize economic growth and manage inflation effectively.
- Prominent economists express varied views on NGDP targeting's efficacy and its potential advantages in responding to economic fluctuations.
Deep dives
Nominal GDP Targeting Framework Review
The Federal Reserve is considering incorporating nominal GDP targeting into its monetary policy framework, which aims to stabilize economic growth and manage inflation. This approach emphasizes the relationship between inflation and output, suggesting that when one fluctuates, the other should be adjusted accordingly. It contrasts with traditional inflation-targeting strategies by advocating for a more dynamic balance that could potentially lead to better overall economic stability. Prominent economists within the Fed, including Mary Daly and Jim Bullard, reflect on the efficacy of this strategy while acknowledging the variety of opinions within the committee.
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