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> They rely on a qualitative understanding of inflation like the Austrians as opposed to a CPI quantitative understanding. Perhaps I’ve missed this, but what t
by wbsss4412 5y ago
> They rely on a qualitative understanding of inflation like the Austrians as opposed to a CPI quantitative understanding.
Perhaps I’ve missed this, but what the hell is a “qualitative” understanding of inflation, and where have MMTer argued this?
Edit: after doing some basic searching, it seems that MMT’s primary critique is that CPI is a poor measure of overall inflation, and that it shouldn’t be a primary target of fed policy, because monetary policy mechanisms don’t have a very direct impact on moving the index.
- marcusverus 5y agoThanks for following up, but I'm not sure that you've put the issue to bed. Do MMT types use some other quantitative understanding of inflation? If not, it seems like main thrust of GP's criticism ("they rely on a qualitative understanding of inflation...as opposed to a... quantitative understanding") stands.
- wbsss4412 5y agoUnfortunately it is really challenging to know what the field as a whole says without undertaking some serious lit. review, but from my understanding their main issue with CPI isn’t that you shouldn’t attempt to understand inflation from a quantitative perspective, rather, CPI itself is but one (imperfect) measure of inflation. The “true” value of inflation isn’t perfectly observable, and further, from a policy making perspective, because of its limitations, CPI shouldn’t be a be all end all target. One should look at other measures, such as economic growth and unemployment (inflation after all, occurs when the money supply grows faster than productive capacity). Perhaps that’s “qualitative” by some definition, but it seems to be that it’s more just a case of goodhart’s law. That’s the best I can gather at the moment.