Richard Shelby, New Keynesian
By Arnold Kling
According to the WSJ’s Andrew Ackerman,
The top Republican on the Senate Banking Committee said Thursday he would urge the Federal Reserve to pursue an explicit inflation target, in the face of renewed interest in the idea.
This is exactly what many of the leading academic macroeconomists of the younger generation have said would be the right way to conduct monetary policy. My guess is that they will now wish to re-think their position. How can a self-respecting New Keynesian be caught on the same side of the debate as Senator Shelby?