Alex Salter just sent me his latest working paper “Not All NGDP is Created Equal: A Critique of Market Monetarism”. I haven’t read the entire paper yet, but Alex is always writing interesting stuff – including as a guest blogger at this blog – so I want to share it with my readers already.
Here is the abstract:
Market Monetarism, with its policy rule of NGDP targeting, has in common with free banking that both seek to avoid monetary disequilibrium. One might conclude that these are different approaches to achieving the same end. The purpose of this paper is to show that the proximate ends are in fact conceived differently: Stable NGDP as an object of choice by a central bank is different from NGDP as the emergent outcome of the market process. Furthermore, well-known insights on knowledge, the pricing process, and the institutional context of economic activity suggest that this difference has important implications.
I don’t have time to write a reply to Alex’s paper today, but hope to get back to it soon – or maybe some of my co-Market Monetarist bloggers might. But please have a look – it might be a critique of Market Monetarism, but coming from Alex it is always meant as a friendly critique.