The Scott Sumner Rally

A blog about business and economics.
Sept. 13 2012 10:37 PM

The Scott Sumner Rally

1347590275363
Scott Sumner

As we look at the sharp rise in the US stock market following today's important monetary easing announcement, I think we should all tip the cap in the direction of Scott Sumner whose influence is an amazing blogosphere success story.

Professors at Bentley University who've never published a famous book don't normally shift the public debate. But Sumner's vigorous and relentless blogging throughout the crisis on the potential of expectations-focused monetary policy really broke through. It all began with some links from Tyler Cowen and perhaps a tiff with Paul Krugman. I became a regular reader and his ideas have done a lot to influence me, and you can clearly see the influence on Ryan Avent at the Economist, Matt O'Brien at the Atlantic, Ramesh Ponnuru at National Review, Josh Barro at Bloomberg, and a few of the Wonkblog contributors. Outside the exciting world of online economics punditry, NGDP targeting hasn't (yet!) caught fire as rapidly but it gained explicit allegiance from Christina Romer, Krugman, the economics team at Goldman Sachs, and eventually Chicago Federal Reserve President Charles Evans who started out with a different but similar-in-spirit program.

Advertisement

Then it all came together with the NGDP targeting paper Columbia University's Michael Woodford presented at Jackson Hole. Woodford's not a household name, even among people who follow the news very closely because he chooses not to play the public intellectual role. But he's the author of the main graduate textbook on monetary policy, so he brings a level of authority to the table.

The Fed didn't choose to adopt an NGDP target—neither a growth target nor a level target—today, nor even an Evans-style conditional rule. But the spirit of today's approach clearly shows the influence of the same set of underlying ideas, most of all the rejection of the narrow focus on "credit easing" that had previously dominated the Fed's approach to monetary policy at the zero bound. The ideas here aren't really new per se—Krugman was saying something similar about Japan and the baby-sitting coop back in 1998, and Milton Friedman was known to remark that NGDP expectations are the right gauge of monetary policy—but Sumner was really the guy keeping this torch alive during 2009 and 2010 and forcing it, rather than an endless partisan debate about fiscal policy, back onto the intellectual agenda.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

The Ludicrous Claims You’ll Hear at This Company’s “Egg Freezing Parties”

  News & Politics
Politics
Sept. 30 2014 9:33 PM Political Theater With a Purpose Darrell Issa’s public shaming of the head of the Secret Service was congressional grandstanding at its best.
  Business
Moneybox
Oct. 1 2014 8:34 AM Going Private To undertake a massively ambitious energy project, you don’t need the government anymore.
  Life
Atlas Obscura
Oct. 1 2014 10:32 AM The Corpse-Lined Hallways of the Capuchin Monastery Catacombs
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
  Arts
Brow Beat
Oct. 1 2014 8:46 AM The Vintage eBay Find I Wore to My Sentencing
  Technology
Future Tense
Oct. 1 2014 10:27 AM 3,000 French Scientists Are Marching to Demand More Research Funding
  Health & Science
Bad Astronomy
Oct. 1 2014 7:30 AM Say Hello to Our Quasi-Moon, 2014 OL339
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.