The real world is nominal

Central banks shouldn’t target inflation at all — they should stabilize nominal spending

David Roberts, one of the best climate policy analysts around, was way ahead of the curve in urging technocrats to abandon the dream of economy-wide carbon pricing as the go-to solution for climate change.

As he emphasizes in one of his posts on the subject, “understanding and planning around political economy is just as important as understanding and planning around physics.” A pricing system is incredibly hard to make sufficiently airtight and rigorous because “it’s a very politically toxic thing to talk about. Any effort to increase the ambition of the overall system means that your opponents can run attack ads saying you’re trying to raise the price of gasoline, which is one of the things politicians hate to be seen doing the most.”

But then in his role as a frustrated progressive guy, he tweeted into the void last week that public concern about inflation is mediagenic.