tag:blogger.com,1999:blog-2499715909956774229.post5934238274817299661..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Forward Guidance in the U.K.Stephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-2499715909956774229.post-29946778602035475182013-09-16T15:43:17.495-07:002013-09-16T15:43:17.495-07:00From what I can tell, Carney never said those word...From what I can tell, Carney never said those words - you're just quoting a media article. Or am i missing smin?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-85011302943309294412013-08-08T21:06:08.129-07:002013-08-08T21:06:08.129-07:00Agree. I guess the Fed would just reduce its forec...Agree. I guess the Fed would just reduce its forecast of inflation should it run above 2.5% at an inopportune point in time...no one would know<br /><br />KP Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-25080997020926469862013-08-08T16:06:16.946-07:002013-08-08T16:06:16.946-07:00Agreed - I was more just trying to figure out wher...Agreed - I was more just trying to figure out where he could have been coming from, rather than trying to justify anything :)Matt Nolanhttps://www.blogger.com/profile/05615455113796090765noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-9308469121193703742013-08-08T06:58:23.461-07:002013-08-08T06:58:23.461-07:00I was thinking about the other case: inflation is ...I was thinking about the other case: inflation is high, but Carney claims it's not caused by GDP. Either way, it's not a conditional statement that bears any weight, as whether the inflation was "caused by GDP" or not is in Carney's mind.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-56362436803796107112013-08-08T06:54:30.609-07:002013-08-08T06:54:30.609-07:00It's impossible to observe directly what's...It's impossible to observe directly what's "causing" the inflation, and core inflation measures have always been suspect, which is why central bank inflation targets are usually specified in terms of headline measures. Central bank promises which are conditional on things that can't be directly observed (e.g. we will or will not respond to inflation that is or is not caused by this or that) aren't good for much.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-31297135960680754282013-08-08T00:03:03.377-07:002013-08-08T00:03:03.377-07:00The UK has seen significant changes in indirect ta...The UK has seen significant changes in indirect taxes and exchange rates (price level shocks) - and they don't really talk about core inflation over there.<br /><br />So I suspect he is really trying to say "if our conditional forecasts indicate that core inflation will rise above 2.5%pa in a two-year horizon we will drop the UR condition and tighten". He is using "due to GDP" so he can turn around and rule out changes due to exchange rate depreciation, commodity price spikes, or future changes in VAT.Matt Nolanhttps://www.blogger.com/profile/05615455113796090765noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-81799010953676456502013-08-07T17:28:01.597-07:002013-08-07T17:28:01.597-07:00It's actually even softer than the Fed's c...It's actually even softer than the Fed's conditional threshold forward guidance: the low interest rate environment is going to be abandoned should inflation not only be forecasted to be too high BUT also driven by GDP.<br /><br />KPAnonymousnoreply@blogger.com