Subject of the post is the etablisment (CB) aversion to price level targeting. Post ends with two issues I have pushed on these pages before.
Last time there was a big gap between central banks and leading theorists was during the 1920s, when the leading theorists favored price level targeting (or NGDP targeting in a few cases) and the central banks favored the gold standard. We now know that the leading theorists were correct. It will be interesting to see who ends up being right this time.
"I wasn't at the recent AEA meetings, but I'm told there was lots of discussion of how income inequality reduces aggregate demand. Combine that depressing tidbit with the fact that grad schools no longer teach macroeconomic history."
Last time there was a big gap between central banks and leading theorists was during the 1920s, when the leading theorists favored price level targeting (or NGDP targeting in a few cases) and the central banks favored the gold standard. We now know that the leading theorists were correct. It will be interesting to see who ends up being right this time.
"I wasn't at the recent AEA meetings, but I'm told there was lots of discussion of how income inequality reduces aggregate demand. Combine that depressing tidbit with the fact that grad schools no longer teach macroeconomic history."
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