tag:blogger.com,1999:blog-1110014885778996459.post7979484798730691619..comments2024-03-29T00:15:52.716-07:00Comments on Idiosyncratic Whisk: Monetary Offset applies to Asset Values, tooKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1110014885778996459.post-13373869928205281622014-11-16T11:15:21.413-07:002014-11-16T11:15:21.413-07:00Scott, I guess the question is how much lag there ...Scott, I guess the question is how much lag there is between a monetary adjustment and an NGDP reaction. The Fed uses a 1 year lag on the yield curve indicator, which is the signal I reference in my blog post.<br /><br />You make a good point that the moderate declines in 2006 could be reasonable trend reversion. But that's a sign of monetary policy in 2004 and 2005, isn't it? When would you place the monetary adjustments that relate to the increasingly sharp NGDP declines of late 2007 to late 2008?<br />Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-13676286251989244772014-11-16T07:44:50.636-07:002014-11-16T07:44:50.636-07:00Kevin, I left this comment over at TMI,
I’d focus...Kevin, I left this comment over at TMI,<br /><br />I’d focus on breaking that period up as follows:<br /><br />2004:4 to 2005:4 6.5%<br />2005:4 to 2006:4 5.1%<br />2006:4 to 2007:4 4.4%<br /><br />You could argue the NGDP growth is slowing, but under level targeting that might be appropriate. I don’t see a significant policy change from a 5% level target.<br /><br />Then:<br /><br />2007:4 to 2008:2 1.75% annual rate (mild recession.)<br />2008:2 to 2008:4 minus 3.5% (deep recession)<br /><br />Nick, It would not take very long to catch up to a 2% inflation track, so I think it would be credible. But obviously they have to move the policy instruments to do so.Scott Sumnerhttps://www.blogger.com/profile/15864819372390187247noreply@blogger.com