Seems like these two ideas are the most intriguing. Sumner has largely popularized NGDP targeting though it is particularly George Selig's brainchild.
MMT on the other hand is not a specific policy but rather a different framework for looking at the monetary world under a fiat money system.
So who is winning between the two? Of course the fact is that the two are not necessarily mutually exclusive and are not at all logically necessarily adversarial as one is essentially a monetary policy prescription, the other a framework for seeing the world.
There has been some friction between the two, as there has between MMTers and Krugman whom many still see as deliberately misrepresenting their ideas-that's their opinion, not sure I agree. Sumner sometimes makes somewhat pejorative allusions to them. For the part of MMT, there was a recent post by Cullen Roche that questioned NGDP. Roche spoke of Richard Koo who thinks that the flaw in NGDP targeting is it presumes things like rational market actors, etc.
http://pragcap.com/richard-koo-why-ngdp-targeting-wont-work
"But when the fundamental assumption of academic economists are violated, that private sector is no longer maximizing profits, they are actually minimizing debt because their balance sheets are underwater, then as I explained in my book, there’s very little central bank can do to get GDP or inflation moving. And without the fiscal help, even money supply can shrink, even with all the quantitative easing by central banks."
For my part I will admit that I don't feel I have a deep enough understanding of how monetary policy works to judge whether or not it contains erroneous assumptions. It sounds good as for one thing there is little chance it seems for fiscal policy right now. I don't know what Koo's statement implies either-does monetary policy have no efficacy according to him?
On the other hand I like MMT-many are put off by their attitude but once you look to the ideas it seems to have something of value. My goal is to understand the monetary system as deeply and as accurately as possible and MMT seems a very good tool. \
For some Sumner-MMT battles see
http://www.themoneyillusion.com/?p=10178
There always generated by far the most comments at Sumner's Money Illusion
No comments:
Post a Comment