Published on Jun 23, 2014
Professor Scott Sumner of Bentley University delivered the Adam Smith Institute’s annual Adam Smith Lecture on Tuesday, June 17th 2014. He called for inflation targeting to be scrapped and replaced with a mandate for the Bank of England to target total spending instead.
Scott B. Sumner is an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation. He has been hailed as the “blogger who saved the economy”.
I think India need to follow a mix of both. For high end manufacturing you need highly trained worker on shop-floor, maybe with a degree. India have just too many engineering collages churning out grad. They may be far more fit on shop-floor rather than walking door to door selling washing powder and shaving gels. At the same time huge population of low skilled worker can be serve labour intensive industries.
Does Raghuram Rajan have a reformist ally in Narendra Modi? Only time will tell if India’s new PM can scale up his fabled “Gujarat Model” to revitalise Asia’s No 3 economy. But there are signs Rajan, RBI governor, is extending an economic olive branch to the new leader, which should cheer global markets.