Market monetarist influence? (butterflies, hurricanes, etc.)

James of London sent me the following:

“4.2 Nominal GDP
The incoming Governor of the Bank of England has talked about the merits of targeting nominal GDP (i.e. GDP at current market prices) instead of inflation as the anchor for monetary policy, which led some commentators to point out that potential barriers to such a policy are the timeliness and periodicity (quarterly) of nominal GDP figures, and the extent to which they are revised.

In the March 2013 budget, the Chancellor of the Exchequer announced an updated remit for the Monetary Policy Committee. Although this signalled no shift from the existing 2% CPI inflation target, it opened up the possibility of a more flexible approach, including the use of intermediate thresholds such as nominal GDP, in exceptional circumstances. The Chancellor asked the MPC to produce an assessment of the merits of using intermediate thresholds in its August 2013 Inflation Report.

In response to this, ONS has recently published an analysis of revisions to nominal GDP (as outlined in section 3.4) and, in the light of this, will be considering possible improvements to the timeliness and quality of nominal GDP estimates to meet the increased user interest. This will enable ONS to respond to the MPC’s assessment in August.”

Remember all that discussion of NGDP in 2008?  Neither do I.

PS.  Larry Kudlow did a piece last night on CNBC, discussing who should replace Bernanke at the Fed.  He mentioned six possible names, and, well . . . . you’ll have to see it for yourself.  BTW, I agree with Hilsenrath that Greg Mankiw would be an excellent choice if Obama opts for a Republican.

PPS.  I understand that people are having trouble processing the idea of me being in charge of the US economy, but stranger things have happened.



31 Responses to “Market monetarist influence? (butterflies, hurricanes, etc.)”

  1. Gravatar of Mark Mark
    30. April 2013 at 08:42

    One of those choices is excellent…however, should one be judged on the company they keep 🙂

  2. Gravatar of Scott N Scott N
    30. April 2013 at 09:03

    Reminds me of the old Sesame Street tune: “one of these is not like the others.”

  3. Gravatar of Randy W Randy W
    30. April 2013 at 09:13

    Scott – never thought you’d be in a list with Richard Fisher and Paul Ryan, huh?

  4. Gravatar of Neal Neal
    30. April 2013 at 09:19

    Paul Ryan?!

  5. Gravatar of marcus nunes marcus nunes
    30. April 2013 at 09:20

    Scott: The company you ‘keep’! Everyone of those guys, including Taylor, would boo you the first time you mentioned NGDP-LT!
    The best choice yould be Christy Romer. Having written we need a regime change in MP à la FDR…

  6. Gravatar of J J
    30. April 2013 at 09:20

    Professor Sumner,

    I’m glad to see your name there. But, you are mixed in with a pretty bad group.

  7. Gravatar of J J
    30. April 2013 at 09:25

    It is interesting that no reporter will ever say we need a more inflationary chairman. They compliment Bernanke for getting inflation under the 2% target and talk about how inflation is low, but still never suggest that we need someone who wants more inflation. Even when they mention you, they don’t mention that you want more inflation.

  8. Gravatar of Arthur Arthur
    30. April 2013 at 09:41

    Brazilian central bank calculates monthly NGDP with less than one month lag. I’m sure the British can do it if they want.

    No sure how big are the revisions though.

  9. Gravatar of TallDave TallDave
    30. April 2013 at 09:46

    It’s amusing Kudlow would mention you in the same breath as “keep the value of the dollar.” Maybe he’s starting to understand the tension with “keep the economy strong.”

  10. Gravatar of Morgan Warstler Morgan Warstler
    30. April 2013 at 10:12


  11. Gravatar of Arthur Arthur
    30. April 2013 at 10:44

    Apparently Brazilian central bank revisions of their NGDP estimates are fairly minor. Comparing the figures of the first time they published a month, and a year latter when they have made all revisions the average difference was 0,3%. Just tested a few months thou.

    Maybe this will become a relevant difference in growth rates. At least the bulk of the revisions occur in the first three months.

  12. Gravatar of ssumner ssumner
    30. April 2013 at 10:52

    Arthur, I strongly agree.

    Everyone, Don’t worry, I won’t forget you guys when I am running the world economy.

  13. Gravatar of TravisV TravisV
    30. April 2013 at 11:29

    Has anyone else noticed this obituary where Ron Paul heaped endless praise on none other than Milton Friedman????

    The death of economist Milton Friedman last week at the age of 94 marks a great loss for advocates of freedom everywhere…..I was proud to know Dr. Friedman for many decades, and considered him a friend…….

    His death only underscores the sad lack of economics knowledge in Washington, however……The nation would be well-served if Congress spent more time reading the works of Milton Friedman, and less time worrying about petty party spoils.

  14. Gravatar of J J
    30. April 2013 at 11:37

    An ideologue such as Ron Paul has to be selective in his readings of any academic. Even Hayek would be disturbed by some of Ron Paul’s beliefs on social as well as economic policy.

  15. Gravatar of Geoff Geoff
    30. April 2013 at 11:44

    “Everyone, Don’t worry, I won’t forget you guys when I am running the world economy.”

    And people won’t forget you after you have driven it further into the ground. You think Greenspan took a licking? Just wait until the next bubble bursts. Bernanke likely won’t be able to go out in public.

    I recommend using the technique of Stalin and Lenin after your central plan fails: Blame foreign enemies and domestic traitors.

  16. Gravatar of George George
    30. April 2013 at 11:46


    Haha, “even Hayek.”

    You would love this video:

  17. Gravatar of Steve Steve
    30. April 2013 at 11:59

    “Everyone, Don’t worry, I won’t forget you guys when I am running the world economy.”

    But, won’t you be just a clerk, tabulating the votes of millions of NGDP futures traders?

  18. Gravatar of Brian Donohue Brian Donohue
    30. April 2013 at 12:13

    Tsk tsk.

    “I understand that people are having trouble processing the idea of me being in charge of the US economy…”

    I know you’re being flip, but this statement reflects a serious, if widespread, misunderstanding of how things like ‘the US economy’ work.

  19. Gravatar of Michael Michael
    30. April 2013 at 12:35


    Here is your true opposite:

    Cohrane quoting Taylor arguing that our focus should be on the instruments of monetary policy and not the goals.

  20. Gravatar of ChargerCarl ChargerCarl
    30. April 2013 at 12:38

    Warsh, Fisher, Taylor, Forbes, Ryan, and…Sumner?

    Wow talk about a black sheep, lol. Im thankful its not up to Kudlow.

  21. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    30. April 2013 at 13:00

    ‘This skill for perspective has disturbed a number of critics who’ve recently commented on Bush’s painting. The thought goes like this: “Bush-the-President was terrible at seeing things from different points of view. But Bush-the-Painter seems to have a natural propensity to see things from different points of view. He was an arrogant and single-minded politician, but he seems to be a sensitive and flexible artist. How can this be?”

    ‘This problem got me thinking about Degas.’

    This must have been written by Paul Krugman’s daughter.

  22. Gravatar of Rodrigo Escalante Rodrigo Escalante
    30. April 2013 at 16:24

    Congrats professor! you have my vote for chairman

  23. Gravatar of Bill Ellis Bill Ellis
    30. April 2013 at 16:47

    Butterflies, hurricanes and viral memes.

    The internet has been good for economists of all stripes who dared to blog… But some have excelled well past the others.
    I read many of them every day.

    As mired as you all are in disagreements and resentment… it has been a very good thing for all.

    If it was not as passionate would it be as vital ?

  24. Gravatar of Tom Brown Tom Brown
    30. April 2013 at 16:47

    @ssumner, you write:

    “Everyone, Don’t worry, I won’t forget you guys when I am running the world economy.”

    To some of us that sounds like a threat!


  25. Gravatar of Cameron Cameron
    30. April 2013 at 19:40

    You’d think he would have invited you on the show by now if he’s willing to promote you for next fed chairman. 🙂

  26. Gravatar of Saturos Saturos
    1. May 2013 at 00:22

    I just… I just… just… can’t… what no *brain shutting down*

  27. Gravatar of Rien Huizer Rien Huizer
    1. May 2013 at 04:46


    Greenspan ghot his job only after I met him on a flight from Chicago to New York (and many years later). Bernanke: much more of an economist and politically pretty useless. I’ve never met you on a plane, you are academically not quite where Bernanke was (citations!). So, how useful can you be politically to make up for those two defects? I must admit, market monetarism is a politician’s dream thing to adopt, FOR A WHILE..

  28. Gravatar of xtophr xtophr
    1. May 2013 at 05:11

    Funny moment when the reporter was talking about Yellin saying that Wall Street perceives her as ‘dovish’ and that she would have to ‘prove herself’ by pulling back QE3 sooner than a (presumably more hawkish) chief would.

  29. Gravatar of ssumner ssumner
    1. May 2013 at 06:49

    Brian, If you know I’m being flip, why take it seriously?

    Thanks Rodrigo, but don’t hold your breath.

    Thanks Bill.

    Tom, Unfortunately monetary policy is too blunt an instrument to single out my enemies.

    Saturos, Is that a pop culture reference that went over my head?

    Rien, I don’t believe in coincidences.

    xtophr, I noticed that too, but then he backed off.

  30. Gravatar of ssumner ssumner
    1. May 2013 at 06:52

    Michael, Cochrane has things backward. An instrument approach gives them too much discretion–they need a clear goal.

  31. Gravatar of Wonks Anonymous Wonks Anonymous
    1. May 2013 at 07:40

    Rothbard was frequently very critical of Friedman. But when Friedman passed, the most obvious inheritor of Rothbard’s an-cap “Mr. Libertarian” mantle, Walter Block, spoke similarly high praise. I think it reflects better on them even if they had disagreements.

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