How the market monetarists changed the debate

Ryan Avent at The Economist explains just how influential Scott Sumner has been:

First, Dylan Matthews has a very nice interview with Michael Woodford that I recommend reading in its entirety. As part of it, however, Mr Woodford disavows any influence from Scott Sumner in his choice to move toward a recommendation of a nominal GDP target. It is certainly correct to say that Mr Woodford has been focusing on these issues for a while and making important contributions to the literature. That, however, helps illustrate the importance of Mr Sumner and the market monetarist emergence. It seems very possible—probable even—that Mr Woodford and other prominent monetary economists would have been led by the events of the crisis and recovery to approximately the position in the debate they now occupy without Mr Sumner’s influence. But despite the fact that many of the ideas in Mr Woodford’s Jackson Hole paper were already circulating in 2009, most of the economists engaging in public debate and most of those writing about that public debate were then operating under the assumption that fiscal policy was the main if not the only game in town. Mr Sumner helped convince many of those of us with a familiarity with monetary economics to rethink the frame within which we were operating and to reconsider the conclusions we’d drawn. His work made us more receptive to research by people like Mr Woodford.

I’m also am sceptical that Mr Woodford would have included in his Jackson Hole paper a statement of support for nominal GDP targeting—rather than something a bit more obscure-sounding, like “output-gap adjusted price level targeting”—if Mr Sumner had not encouraged so many of us to think of NGDP targeting as an appropriate, viable, and relatively straightforward alternative policy to inflation-rate targeting. As Mr Woodford says in the interview, he was trying in his most recent paper “to express a more helpful proposal”. An NGDP-oriented policy fits that description largely because we’ve all been primed to think in those terms, thanks mostly to the conversation Mr Sumner initiated.

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