What Happened to the Fed’s “Expectations Channel” Did it Work? Maybe Not.
Much assumption on the Fed's action recently is believed to be a mini version of NGDP targeting. Although it is not, it is more of an attempt to use future guidance to affect market expectations. It is a component of NGDP targeting, but nothing more. It is believed that Scott Sumner influenced Ben Bernanke and the Fed's economists. Others are saying Benanke knew it all along, after all, he has been studying this all his life.