Kelly Evans Strange Case Against NGDP Targeting by Yglesias

MMTer Kervick conjures up more arguments againt NGDP Targeting:

There is no reason in principle why you couldn't sustain a continuously growing economy in some country with 15% or 20% of the country's people permanently unemployed.

Seriously? You'd have massive deflation. There's a real relationship between employment levels and growth rates.

Another troll writes

"One of the great advantages of an NGDP target is that it combines prices and real output (which is to say employment) in a single index".

You can have high inflation and negative real GDP growth and still get to your target NGDP. Which tells you its a terrible benchmark.

Stephen Eldrige replies

You *could*, but there's nothing about the present situation that says we *would*. High levels of inflation right now would spur spending and investment rather than hoarding cash and also help highly-leveraged players deleverage, which would help real growth. It's hard to imagine a scenario right now where we get stagflation without a serious supply shock somewhere. Oil issues make that not impossible, of course...