Monday, October 15, 2012

Woolsey 187757 at Sumner 16486 (1): Wrong Focus

That Sumner post is a gold mine. This is from a comment by Bill Woolsey:

Where a 1% growth path for nominal GDP and 2% trend deflation is workable, so is a 3% growth path for nominal GDP and a stable price level. As well as a 5% growth path with 2% trend inflation.

GYAH! The problem is not to pick the level of inflation that we're happy with. The problem is to get real GDP to grow faster.

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