Targeting Nominal GDP
Scott proposes targeting nominal GDP growth instead of the supply of gold, using market expectations to determine the money supply. He argues that this approach could incentivize banks to invest rather than sit on cash, leading to faster economic growth. Russ raises concerns about the credibility of such a promise and the availability of attractive investments in a struggling economy. Scott counters with historical examples and techniques to establish credibility and change expectations.In this clip
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Scott Sumner on Money, Business Cycles, and Monetary Policy
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