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Channel: Comments on The Lucas critique cuts both ways
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By: stoneybatter

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Scott, you said “I think the Fed has to do this [create a NGDP security market].”

Given Treasury already issues TIPS, do you not think it is more feasible/likely that they could issue securities indexed to NGDP in the same way as TIPS? Then it would be easy to calculate expected NGDP, albeit with the usual qualifications about liquidity between NGDP-linked bonds and nominal Treasuries.

That seems easier to achieve than the Fed creating an entirely new market.


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