My latest Macro Musings podcast is with George Selgin, director of the Cato Institute's Center for Monetary and Financial Alternatives. We discuss in depth Selgin's call for a a Productivity Norm, a nominal income target for central banks that would result in inflation moving inversely with expected productivity growth. That is, he would have central banks stabilize aggregate demand growth but allow more price level flexibility based on technological advances. Along the way we cover the difference between benign and malign deflation and look, examine some of the historical cases of deflation, and discuss the recent productivity surge of the late 1990s and early 2000s.
It was a great conversation with George. Those listeners wanting more information on his Productivity Norm target for central banks should check out the links below.
A more complete but readable discussion of the productivity norm idea is given in IEA's book "Less than Zero: the Case for a Falling Price Level in a Growing Economy" (pdf) by George Selgin