Market monetarism in France

I studied three languages in school, but don’t speak any of them.  And I’m afraid that I’m shamefully unaware of the trends in European monetary economics, including the inner workings of the ECB.  (Although people better informed than me also seem a bit puzzled by the ECB, so maybe that’s nothing to be ashamed of.)

Nicolas Goetzmann  sent me the following article that he wrote for a French news site.  I”ll provide a translation of the final three paragraphs:

In the U.S., unlike the ECB, the proponents of monetarism stopped taking the fight against inflation as the only objective of economic policy

It should be noted that the debate introduced by the “market monetarists” is now very strong in the United States, the very nature of the mandate given to the central bank. Supporters of a policy based on demand, and more specifically on nominal GDP (ie GDP including inflation) are becoming more numerous.

It is not aimed at setting up an inflationary policy, but rather a policy dealing equivalently with price stability and the level of demand.  The remarkable work done by Scott Sumner, professor of economics at the University of Bentley, on the objective of nominal GDP, is now quite influential in the United States. The subject is being discussed within the U.S. Federal Reserve, following discussion by Christina Romer, former economic advisor of the first Obama administration (New York Times), Paul Krugman, Nobel Prize (the New Blog York Times) and Jan Hatzius, chief economist at Goldman Sachs. This major academic contribution, allowing an understanding of the monetary crisis, is still absent from the European debate.

I started with Google translate, and tweaked it here and there.  (I love the “University of Bentley” phrasing.)  I apologize to my French readers if I butchered the translation.  Here’s the original of those three paragraphs:

Aux États-Unis, contrairement à la BCE, les tenants du monétarisme ont cessé de prendre la lutte contre l’inflation comme seul objectif de la politique économique

Il est à noter que le débat introduit par les « market monetarists » est aujourd’hui très vif aux Etats-Unis, sur la nature même du mandat octroyé à la banque centrale. Les soutiens à une politique basée sur la demande, et plus précisément sur le PIB nominal (c’est à dire un PIB incluant l’inflation) se font de plus en plus nombreux.

Il ne s’agit pas ici de mettre en place une politique inflationniste, mais une politique traitant de façon équivalente la stabilité des prix et le niveau de la demande, donc de l’emploi. Le travail remarquable réalisé par Scott Sumner, professeur d’économie de l’Université de Bentley, sur l’objectif de PIB nominal, prend une ampleur considérable aux Etats-Unis. Le sujet étant actuellement discuté au sein de la Réserve Fédérale américaine, et ce, notamment suite aux articles de Christina Romer, ancienne première conseillère économique de l’administration Obama (New York Times), de Paul Krugman, prix Nobel (blog du New-York Times) et Jan Hatzius, chef économiste de Goldman Sachs. Cet apport académique majeur, permettant une compréhension monétaire de la crise, est encore absente du débat européen.

Nicolas said the website started in early 2011, but is already quite popular.

Update: Marcus Nunes has a better translation, and of the entire article



10 Responses to “Market monetarism in France”

  1. Gravatar of Kevin Donoghue Kevin Donoghue
    20. December 2011 at 08:45

    I’m afraid it isn’t just NGDP targetting which is “still absent from the European debate”, it’s any serious consideration of macro policy. Partly this is because most EU economies are closer to the small-open-economy end of the spectrum, in contrast with the US, which can sensibly be thought of as a closed economy, at least for introductory purposes. So policy wonks and pundits are typically somewhat illiterate. Too many conversations are reminiscent of the old joke we used to crack about the IMF: they want everyone to be more competitive with everyone else.

  2. Gravatar of Benjamin Cole Benjamin Cole
    20. December 2011 at 08:48

    The Scott Sumner-internet-Market Monetarism story is one of the great tales of our time, perhaps of all time. I claim movie rights (well, I live a couple miles from Hollywood).

    Incredible. A smart guy, armed only with an Internet connection, has taken charge of the national debate on monetary policy, and (we can hope still) will alter the course of monetary policy (and macroeconomic policy) for many decades to come.

    Federal Reserve Board members: When will you get a clue?

  3. Gravatar of Kevin Donoghue Kevin Donoghue
    20. December 2011 at 08:56

    Two other things I meant to say:

    1) Congrats on the publicity.

    2) This, by Steve Randy Waldman, is the best post I’ve seen recently on the farce we call the ECB:

  4. Gravatar of Bob Murphy Bob Murphy
    20. December 2011 at 09:26

    Scott wrote:

    I studied three languages in school, but don’t speak any of them.

    No wonder you can’t understand what the Austrians are saying!

    (Remember to tip your waitresses, everybody.)

  5. Gravatar of ssumner ssumner
    20. December 2011 at 09:28

    Kevin, Good point about the small countries in Europe. On the rare occasions when I read European business cycle commentary, they never seem to have an understanding of the demand-side problem for the aggregate economy–just special problems in particular countries.

    Thanks Ben,

    Thanks Kevin, I am actually helped a lot by smart criticism from the Keynesian perspective (yourself, Andy Harless, Ram, etc.) It forces me to rethink my assumptions.

    Yes, The Waldman column is excellent as usual. I sometimes wonder what he is doing as a grad student at Kentucky. (No offense to Kentucky.)

  6. Gravatar of ssumner ssumner
    20. December 2011 at 09:29

    Bob, I was going to add that “English was one of the three.” 🙂

  7. Gravatar of Liberal Roman Liberal Roman
    20. December 2011 at 10:45

    Interestingly enough, Sarkozy has been a critic of ECB’s tight monetary policy for quite awhile

    OT: Have you seen Kocherlakota’s interview this morning with Steve Liesman on CNBC?

    It infuriated me. He is not ignorant. He understands that monetary policy can help. He even wants to create a predictable monetary regime in which the market doesn’t react to every word of a Fed governor. But yet, he still won’t do anything because there maybe some structural problems in the economy. Ughhh!!

  8. Gravatar of Market Monetarism in France – English version | Historinhas Market Monetarism in France – English version | Historinhas
    20. December 2011 at 12:04

    […] article by Nicolas Goetzmann was sent by the author to Scott Sumner, who translated the ending. The full translation […]

  9. Gravatar of ssumner ssumner
    20. December 2011 at 19:29

    Liberal Roman, I don’t know if I can bear to watch, but I guess I should.

  10. Gravatar of chris mahoney chris mahoney
    7. July 2012 at 12:09

    It is my distinct impression that macro/micro is not taught in France, and maybe not even in Europe (aside from Italy, where they are very smart). The Frenchmen that I know get their information from American sources. Economics in France is Hebert Marcuse and problems of neocolonialism.

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