Is the current (today’s) NGDP peg credible?
In my system, each day is a new contract. As long as they peg that contract, it is credible FOR THAT DAY, just like the 1000 yen example. And just as in that case, if they think the government will realize that for political reasons it is a big mistake, and expect the peg to change in the future, that may occur with NGDP targeting as well. It goes without saying that one cannot commit from now until the end of time, or maybe even until next week. But one can commit today if you buy and sell unlimited contracts today. Now I know you don’t accept the risk premium argument, but putting that aside, they can force the public to expect 5% NGDP growth over the next 12 months, but cannot force them to expect that growth rate from one month from now, to 13 months from now. Those contracts haven’t been traded yet, and the government might decide never to trade them. JKH, Sorry, that won’t work. You were clearly arguing the price peg would fail, in the sense that a currency peg could fail. And yo
