September, 2009

We Can’t Agree on Everything, George…

by Scott Sumner
The Conversation
September 30th, 2009

Otherwise we’ll have nothing to debate at the Southern Economic meetings in November. But seriously, I’d like to offer a conditional acceptance of your productivity norm. Here are the two conditions: 1. Assume that inflation expectations have been reduced to roughly zero. Ideally this would be done very gradually, to prevent any disruption of labor [...]

Read: We Can’t Agree on Everything, George…

Some Final Thoughts

by James D. Hamilton
The Conversation
September 30th, 2009

Let me take this opportunity to thank the participants for an interesting discussion and offer my perspective on the areas of agreement and disagreement. I agree with Sumner that achieving a higher level of nominal GDP growth over the last year would have been helpful and that the Fed put insufficient weight on this objective.  [...]

Read: Some Final Thoughts

Defining the Stance of Monetary Policy Is Harder than It Looks

by Scott Sumner
The Conversation
September 29th, 2009

Jeffrey Hummel has listed four points in a response to our recent discussion, and then one more in a separate post. I agree with much of what he has to say, but there are enough points of disagreement that it’s worth going through these one at a time: I agree that the financial crisis was [...]

Read: Defining the Stance of Monetary Policy Is Harder than It Looks

Let’s Make a Deal

by George A. Selgin
The Conversation
September 29th, 2009

Okay, Scott; I won’t insist on two percent NGDP growth; why don’t we just split the remaining difference, making it 2.5, and call it a day. I’m also very happy to accept your suggestion that, for safety’s sake, a move toward free banking ought to be coupled with an arrangement in which the reserve base [...]

Read: Let’s Make a Deal

Clearing up Some Miscommunication

by Scott Sumner
The Conversation
September 29th, 2009

Hamilton and I are still miscommunicating on two points. Professor Hamilton continues to argue that if the Fed promised to buy or sell unlimited amounts of 12 month forward NGDP futures contracts at a five percent premium over current NGDP, it might lead to an almost infinite demand for such contracts if someone expected six [...]

Read: Clearing up Some Miscommunication

Taxing Banks for Holding Reserves

by Jeffrey Rogers Hummel
The Conversation
September 28th, 2009

In his first reply to the three of us, Scott Sumner asked: “Does anyone have any thoughts on my proposal to charge a negative interest rate on excess reserves as a way of reducing the hoarding of base money? Sweden recently adopted this proposal.” (I assume Scott meant “charge a positive interest rate,” which is [...]

Read: Taxing Banks for Holding Reserves

Score-Keeping with Selgin

by Scott Sumner
The Conversation
September 28th, 2009

George, every time I read your arguments it makes me want to chop a few more tenths of a percent off my proposed NGDP growth target. This was no exception. However I am still not completely convinced by your arguments. Let’s start with this claim: (3) regardless of the feedback rule employed, the variance of [...]

Read: Score-Keeping with Selgin

Agreements and Disagreements

by Jeffrey Rogers Hummel
The Conversation
September 28th, 2009

The discussion seems to be careening into ever more technical issues, with George Selgin now invoking “Calvo-pricing probability parameters” and “Ramsay-optimal monetary policy.” Although I find this all quite fascinating, I fear it is too esoteric for the bulk of Cato Unbound‘s readers. And unnecessarily so, because the essential questions under consideration can be examined [...]

Read: Agreements and Disagreements