tag:blogger.com,1999:blog-7464708.post1319077743806998669..comments2024-03-22T06:05:36.544-04:00Comments on Kids Prefer Cheese: Do you believe in magic?Mungowitzhttp://www.blogger.com/profile/02340064320347875601noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-7464708.post-23101403583386544892011-10-05T23:14:17.957-04:002011-10-05T23:14:17.957-04:00"All the Fed can do is act each period accord..."All the Fed can do is act each period according to its own preferences (yes it's weird to treat the Fed as a unitary actor given all the dissents we've seen recently, sorry)."<br /><br />Isn't this essentially Sumner's point, though? Isn't the stated purpose of Sumner's blog to influence those preferences? He wants to change the views in the profession in general, but also to change the views of economists with a voice in setting the Fed preferences in particular. <br /><br />This might be more ambitious than is reasonable for a blogger, but as Alex says I don't think it's in conflict with the time inconsistency literature. The Fed doesn't have to lie (which wouldn't work) to get markets to believe in a 5% GDP level target if the central bank *actually* wants a 5% GDP level target.Normanhttps://www.blogger.com/profile/12866136113454261245noreply@blogger.comtag:blogger.com,1999:blog-7464708.post-36719876109821396402011-10-05T14:04:53.774-04:002011-10-05T14:04:53.774-04:00Didn't the market react to the announcement of...Didn't the market react to the announcement of QEII? It's probably true that the Fed can't just make the announcement and then let the market turn it into a self-fulfilling prophecy, but it's pretty likely that once they make the announcement and act on it for a reasonable fraction of time interval, the market will start take them at their word. I don't think this is irreconcilable with Kydland and Prescott.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7464708.post-50466888332936631482011-10-05T09:59:55.859-04:002011-10-05T09:59:55.859-04:00You are too hard on Scott Sumner. He wants the Fed...You are too hard on Scott Sumner. He wants the Fed to make grave pronouncements and the do nothing. I don't care about pronouncements as long as the Fed does nothing. We may have gotten to our positions be different paths, but the important thing is that we agree on policy.Tomhttps://www.blogger.com/profile/08574355302581451838noreply@blogger.com