tag:blogger.com,1999:blog-2546602206734889307.post5256745960895329857..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: Going beyond Quantitative EasingMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-2546602206734889307.post-38954676106570206992012-02-29T13:06:53.707+00:002012-02-29T13:06:53.707+00:00"Also, it would be perfectly possible to get ..."Also, it would be perfectly possible to get monetary policy alone to do more WITHOUT deliberately stoking inflation (at least on some definitions of the words monetary and fiscal). We could just print money and distribute it to households via reduced VAT, reduced National Insurance contributions, etc."<br /><br />You don't think this would lead to inflation?econojonhttps://www.blogger.com/profile/11836028530972814027noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-39072398248464528432012-02-27T16:15:28.216+00:002012-02-27T16:15:28.216+00:00I agree with Geoff Willis above: the BoE is effect...I agree with Geoff Willis above: the BoE is effectively already doing NGDP targeting. At least it certainly is not doing pure inflation targeting.<br /><br />As to the arguments against a more powerful monetary stimulus without any assistance from fiscal, I set out above ten reasons against such a policy here:<br /><br />http://ralphanomics.blogspot.com/2012/02/twelve-reasons-why-mmt-is-right-on.html<br /><br />As to a more powerful monetary stimulus deriving from higher inflation I can think of a very good argument against this: if the only way of getting monetary policy to do more involves debasing the currency and robbing pensioners of their savings, then trying to get monetary policy to do more without any assistance from fiscal is a farce, to put it politely.<br /><br />Also, it would be perfectly possible to get monetary policy alone to do more WITHOUT deliberately stoking inflation (at least on some definitions of the words monetary and fiscal). We could just print money and distribute it to households via reduced VAT, reduced National Insurance contributions, etc.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-85174578212419957232012-02-27T15:45:47.725+00:002012-02-27T15:45:47.725+00:00The UK government is busy at the moment. We'v...The UK government is busy at the moment. We've got ourselves into a bit of a mess with Murdoch, McKinsey, privatising the NHS and so on. Little things like the economy will have to wait; our careers are at stake here.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-5294994008535102522012-02-27T13:12:04.985+00:002012-02-27T13:12:04.985+00:00Given the levels of inflation in the UK over the l...Given the levels of inflation in the UK over the last few years, we had sort of assumed that NGDP targetting had already become discreetly accepted policy at the BoE. Shame it hasn't actually started working yet.Geoff Willishttp://econodynamics.orgnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-69691300863785412232012-02-26T11:50:36.811+00:002012-02-26T11:50:36.811+00:00I quite like the idea of a price-level target, but...I quite like the idea of a price-level target, but the fact that we are in a period of excessive inflation would seem to imply that under such a regime monetary policy would need to be tightened, reducing expectations of future inflation.<br /><br />As for changing the inflation target, I think this is a dangerous game. It would undermine the credibility of the inflation target because people would infer that the inflation target would be raised whenever it was expedient to do so. Note that there would never be a reason to reduce the target. So we end up with an inflation bias because we've added an element of discretion to monetary policy. Long-term inflation expectations would no longer be anchored to the present inflation target.<br /><br />As for the question: <br /><br />"can anyone explain to me why the Bank of Japan has just announced an inflation target of only 1%?"<br /><br />perhaps it's because they have a hard time achieving a higher inflation rate. If they target 3% but only achieve 1%, people will lose faith in the target.econojonhttps://www.blogger.com/profile/11836028530972814027noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-66326036443025747582012-02-26T11:39:45.995+00:002012-02-26T11:39:45.995+00:00Bearing in mind the cyclical recovery of prices af...Bearing in mind the cyclical recovery of prices after a depression, it would not be very difficult to create a reasonable inflationary gap even if the initial target for inflation it set not too high above the 2%.<br /><br />Government could offset any criticism by distributing back into the community the proceeds from the inflation tax in the form of tax cuts for low income earners, which could even be made to coincide with next election.<br /><br />The problem is, as Keynes said: In a commodity inflation the earnings of the factors of production are worth less than what they are producing and the difference is arbitrarily distributed amongst the members of the entrepreneurial class" but that would be not too much to pay in order to reduce unemployment.Carvapaihttps://www.blogger.com/profile/18066643678044979412noreply@blogger.com