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The author Scott Sumner
Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

S. Sumner: Money Illusion

Identifying monetary policy shocks

People generally visualize monetary shocks as a univariate phenomenon, perhaps a change in the short-term interest rate, or a change in the monetary base. Up or down.Over at Econlog, I recently argued that monetary shocks are a multivariate phenomenon. For example, a monetary shock might impact both the spot exchange rate and the forward exchange rate. Here I’ll present a graph that illustrates various possible monetary shocks. I define Et at the spot price of foreign...

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A monologue about “a conversation about race”

I’m hardly the first person to notice that we haven’t yet had a useful “conversation about race”, and are not likely to have one in the future.There are multiple reasons for this. Many on the right have an unimaginative view of the black community, seeing it as “the other”. Thus problems of unemployment and drug use are assumed to reflect cultural failings in the black community. When the same sorts of problems of unemployment and drug use hit many working class whites in the...

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Most Nordic countries flattened the curve

I’m not sure the precise definition of “Nordic”, but these countries seem to fit the bill: Switzerland was hit hardest in its Italian section, so it’s less of an outlier than it appears. The Netherlands is clearly an outlier, although it has also flattened the curve. In the US, the death rate appears to be falling rapidly. The average death rate has been about 5% of reported cases (although closer to 1% of actual cases.) Now the marginal death rate of newly reported...

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Trump doesn’t kid. (Just kidding)

[This post is silly. If you want a good post then check out my newest at Econlog Reporters asked Trump if he was kidding when he discouraged testing for coronavirus: “I don’t kid,” Trump said when pressed by reporters on Tuesday. “Let me make it clear.” Most people were sucked in by that. But not me. I suggested that he might be one of those Andy Kaufman type comedians, who prolonged the act far past the point where most comedians give up. And now Trump has...

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As I keep saying, lockdowns are mostly endogenous

Roughly 99% of people think that low interest rates are an expansionary monetary policy. But the readers of this blog know otherwise. They know that low rates often reflect the delayed effect of previous tight money policies. Roughly 99% of people think lockdowns are a restrictive Covid-19 policy. I hope to convince you that lockdowns are mostly endogenous. That countries like Taiwan did not close their restaurants precisely because they had quite effective Covid-19...

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Adam Smith Institute seminar on NGDP targeting

I recently participated in an Adam Smith Institute seminar on NGDP targeting (with Anthony Evans and Matt Kilcoyne.) I had my usual technical problems with Zoom, and lost my train of thought a few times. But otherwise it went well. I also updated my 2011 NGDP paper. Commenter Matt Moore pointed me to another pro-NGDP targeting paper by another UK think tank (The Centre for Policy Studies). It’s written by Sajid Javid, who was recently the Chancellor of the Exchequer....

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Have you noticed . . .

.. that the same sort of conservative who regards the mercy killing of a 91-year old man with terminal lung cancer as a moral abomination, brushes off those who worry about healthy 76-year olds dying of Covid-19... the same sort of conservative who thinks 9/11 was a great national tragedy because 3,000 died, and who favored going to war with much of the Muslim world in response, and who favored intrusive bureaucracies such as “Homeland Security”, regards wearing a mask to...

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Trump kills Americans to look good? No kidding!

I have argued that Trump would gladly kill enormous numbers of Americans to get re-elected. On the other hand, that’s not the sort of thing that a president admits publicly. It sounds kinda bad.To his credit, Trump is willing to admit this quite publicly. His administration was so horrified by his recent comments that they rushed out a statement saying that he was just kidding, as they did after numerous other “gaffes”. But Trump’s having none of that, he continues to insist...

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Slate Star Codex is more valuable than the New York Times

Update: If this tweet is accurate, the NYT thought it was more important to out Scott Alexander than to get an interview with him—which would have made the story ten times more interesting. As you may know, Slate Star Codex was recently deleted because the NYT has threatened to print a story with the real name of Scott Alexander.When I suggest that Slate Star Codex is more valuable than the NYT, I mean in an intellectual sense. Obviously the NYT has a greater market...

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Hard money is giving us socialism

Over the past few years, I’ve occasionally done some posts with titles like “Inflation of socialism?” It’s now clear that society has decided on socialism. So how did we get here? I’ve recently listened to some excellent discussions in a Cato seminar on reforming the Fed. Many of the participants have suggested that the recent increase in activist credit and fiscal policies is an inevitable and/or desirable outcome, given the severity of the recession. Obviously I don’t...

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