I’ve got a new article in Pieria, arguing against NGDPT:
However, I believe – as in the bottom right section of the table – that NGDPT would actually be completely ineffective. It is tautologically true that a given level of nominal income will correspond to a certain stock of money M, turned over at a rate V, and therefore MV = PY. However, much like the Savings = Investment confusion, it does not follow that there is an arrow from the left hand side of the equation to the right hand side. It may simply not be the case that an increase in the ‘available’ stock of money translates into an increase in income at all.
I also note that the empirical evidence suggests RGDP moved first in the recent crisis, before NGDP and before NGDP expectations. I don’t really know how market monetarists can square that fact with their framework.
I temper my criticisms of market monetarism in the piece, but to be honest I find the whole thing pretty worthless. Market monetarists continually evade pertinent criticisms from MMTers and endogenous money theorists, who point out that things simply do not work the way they think they do. Any attempt at a serious discussion of transmission mechanisms is met with ‘expectations!‘ as if expectations are a magic wand and not simply a reflection of the actual behaviour of the economy. Scott Sumner in particular refuses to discuss transmission mechanisms or engage the Lucas Critique, and seems to be more concerned with making out he is an oppressed minority than actual arguments.
Anyway, I’ll end my rant here – the actual piece has the important points.