Highly recommended: the recent Scott Sumner interview with Jim Pethokoukis. Jim is obviously not a monetary economist, so he asks many of the questions that will occur to the “man on the street” (e.g., “aren’t you proposing to increase inflation?”).
I think the end result of the back and forth is a reasonably clear explanation of how level-targetting works, why it will correct the worst monetary tightening since the 1930′s. Best is NGDP-Level-Targeting (NGDPLT). Second best is inflation-level-targeting.
For those who just came into this conversation, I’ll replay a sample of a few economists who are aligning with Scott Sumner’s analysis and prescription :
E.g., Christina Romer, former Chair of the Council of Economic Advisers in the Obama administration: Dear Ben: It’s Time for Your Volcker Moment.
E.g., see Harvard’s Jeff Frankel: Nominal GDP Targeting Could Take the Place of Inflation Targeting
E.g., see Mark Thoma “Inflation Targeting is Dead”.
E.g., see Kansas City Fed Michael Woodford’s paper just released at the Jackson Hole conference “Methods of Policy Accommodation at the Interest-Rate Lower Bound“.
This is not meant to be “an argument by authority”. Read those links — draw your own conclusions. Myself, I would say it is four years late for Ben’s “Volker moment”. If only the pols were not so busy spending millions of adv. bucks on all the wrong topics.
