The Fed Framework Review: Macro Musings’ Greatest NGDP Targeting Hits

5 snips

Jan 27, 2025

Guest

Evan Koenig

Guest

George Selgin

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.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

INSIGHT

Fed Framework Flexibility

Mary Daly suggests the Fed considers various monetary policy frameworks.
The goal is to find the most effective approach for the American population.

INSIGHT

Counter-Cyclical Inflation

Nominal GDP targeting seeks to create counter-cyclical inflation, benefiting macroeconomic stability.
This contrasts with traditional strategies that don't consider the correlation between inflation and output.

ANECDOTE

Personal Motivation

Evan Koenig's interest in nominal GDP targeting stemmed from a personal experience.
Buying a home with a mortgage made him realize the importance of predictable income streams.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

On this special greatest hits compilation episode our host David Beckworth primes listeners for the Fed Framework Review by highlighting the best snippets from past shows discussing nominal GDP targeting. This episode includes Mary Daly’s thoughts on NGDP targeting, Evan Koenig on the basics of NGDP targeting, George Selgin on Powell’s hesitations with NGDP targeting and how it responds to supply shocks, Jim Bullard on the financial stability of NGDP targeting, Eric Sims on the New Keynesian argument for NGDP targeting, Carola Binder on the benefits of NGDP targeting, Charlie Evans on the prospects of NGDP target, and much more.

Check out the transcript for this week’s episode, now with links.

Follow David Beckworth on X: @DavidBeckworth

Follow the show on X: @Macro_Musings

Check out our new AI chatbot: the Macro Musebot!

Join the new Macro Musings Discord server!

Join the Macro Musings mailing list!

Check out our Macro Musings merch!

Subscribe to David's new BTS YouTube Channel

Timestamps:

(00:00:00) – Intro

(00:02:31) – Mary Daly on Nominal GDP Targeting Considerations for the 2024-25 Fed Framework Review

(00:06:13) – Evan Koenig on the Basics and Preferred Structure of a Nominal GDP Targeting Framework

(00:14:17) – George Selgin on Chair Powell’s Concerns About Nominal GDP Targeting

(00:21:35) – Jim Bullard on the Financial Stability Argument for Nominal GDP Targeting

(00:24:12) – Eric Sims on the New Keynesian Rationale for Nominal GDP Targeting

(00:28:23) – Carola Binder on Two Major Benefits of Nominal GDP Targeting

(00:33:40) – George Selgin on How Nominal GDP Targeting Would Handle Supply Shocks

(00:46:55) – Charlie Evans on the Prospects for Nominal GDP Targeting During the 2024-25 Fed Framework Review

(00:50:57) – Bonus Segment: Enhancing the Nominal GDP Targeting Framework

(00:53:08) – Gauti Eggertsson on the Merits of a Cumulative Nominal GDP Level Target

(00:55:50) – Scott Sumner on Targeting a Nominal GDP Futures Contract

(01:04:25) – Outro