Bryan Caplan sent me the following question:
Bill Dickens wants to bet me that looser Japanese monetary policy won’t boost Japanese NGDP. What victory conditions should a market monetarist consider prudent and probative?
So I thought I’d see what others think.
I don’t like these sorts of bets, as I see some ambiguity here. Is the bet over whether the BOJ will adopt easy money? Or whether NGDP will rise if it does adopt easy money? Given that I define easy money as rising NGDP, I think you can see my dilemma. I’d rather we just go ahead and set up an NGDP futures market.
PS. I seem to recall that Japan’s NGDP is now lower than 20 years ago, even though its population is higher. But its population is now falling. I believe Japan’s NGDP will rise at least 1% per year going forward.