American economist
Scott B. Sumner (born 1955) is an American economist. He was previously the Director of the Program on Monetary Policy at theMercatus Center atGeorge Mason University , a Research Fellow at theIndependent Institute , and a professor atBentley University inWaltham, Massachusetts . His economics blog,The Money Illusion ,[ 1] nominal GDP targeting , which says that theFederal Reserve and othercentral banks should targetnominal GDP ,real GDP growth plus the rate of inflation, to better "induce the correct level of business investment".[ 2]
In May 2012,Chicago Fed PresidentCharles L. Evans became the first sitting member of theFederal Open Market Committee (FOMC) to endorse the idea.[ 3]
AfterBen Bernanke 's announcement of anew round ofquantitative easing on September 13, 2012, which open-endedly committed the FOMC to purchase $40 billion agencymortgage-backed securities per month until the "labor market improves substantially", some media outlets began hailing him as the "blogger who saved the economy", for popularizing the concept of nominal income targeting.[ 4]
Sumner received a PhD in economics from theUniversity of Chicago in 1985. His published research focuses onprediction markets andmonetary policy .[ 5]
During the2007–2008 financial crisis , Sumner began authoring a blog where he vocally criticized the view that theUnited States economy was stuck in aliquidity trap .[ 6] central banks such as theFederal Reserve create a futures market for the level of nominal gross domestic product (NGDP, also known as nominal income), and adjust monetary policy to achieve a nominal income target on the basis of information from the market. Monetary authorities generally choose to target other metrics, such asinflation , unemployment, themoney supply or hybrids of these and rely on information from the financial markets, indices of unemployment or inflation, etc. to make monetary policy.[ 7]
In 2015, Sumner publishedThe Midas Paradox: A New Look at the Great Depression and Economic Instability . The book argued that the Depression was greatly extended by repeated gold market shocks andNew Deal wage policies.
A school of economics known asmarket monetarism has coalesced around Sumner's views;The Daily Telegraph Ambrose Evans-Pritchard has referred to Sumner as the "eminence grise" of market monetarism.[ 8] Chronicle of Higher Education Greg Mankiw ofHarvard University andPaul Krugman ofPrinceton .[ 9] Foreign Policy Ben Bernanke 15th on its list of 100 top global thinkers.[ 10]
Nominal GDP targeting [ edit ] Sumner contends that inflation is "measured inaccurately and does not discriminate betweendemand versussupply shocks " and that "Inflation often changes with a lag...but nominal GDP growth falls very, very quickly, so it'll give you a more timely signal stimulus is needed".[ 11] monetary policy can offsetausterity policies such as those pursued by the British government during theGreat Recession .[ 11]
In April 2011, theReserve Bank of New Zealand responded to Sumner's critique of inflation targeting, arguing that a nominal GDP target would be too technically complicated, and make monetary policy difficult to communicate.[ 12] Goldman Sachs were advocating that the Federal Reserve adopt a nominal income target.Nathan Sheets , a former top official at the Federal Reserve and the head ofinternational economics atCitigroup , proposed that the Federal Reserve adopt a nominal consumption target instead.[ 13]
Sumner has argued that one cannot account for the impact offiscal policy without first considering howmonetary policy may affect the outcome; fiscal stimulus may not succeed if monetary policy is tightened in response. Economic journalists have referred to this as the Sumner Critique, akin to theLucas critique .[ 14] The Economist [ 15]
Sumner has been described as alibertarian orclassical liberal .[ 16] [ 17] [ 18] axis of evil ".[ 19] [ 20]
Sumner is a vocal critic ofDonald Trump , calling him "Putin's puppy",[ 21] [ 22] Barack Obama .[ 22] [ 23]
Well known in Bentley's economics department as a "technophobe ," Sumner, who purchased his first cell phone in 2011, apparently "triggered expressions of surprise and amusement when he informed his colleagues that he was starting a blog."[ 2]
Sumner, Scott B. (2023).Alternative Approaches to Monetary Policy (PDF) . Sumner, Scott B. (2021).The Money Illusion: Market Monetarism, the Great Recession, and the Future of Monetary Policy . Chicago:University of Chicago Press .ISBN 978-0226773681 Sumner, Scott B. (2015).The Midas Paradox: A New Look at the Great Depression and Economic Instability Independent Institute .ISBN 978-1-59813-150-5 Sumner, Scott B. (2015). "What Would Milton Friedman Have Thought of Market Monetarism?". In Cord, Robert A.; Hammond, J. Daniel (eds.).Milton Friedman: Contributions to Economics and Public Policy .Oxford University Press . pp. 246– 264.ISBN 9780198704324 Sumner, Scott B. (2012). "5. How Nominal GDP Targeting Could Have Prevented the Crash of 2008". In Beckworth, David (ed.).Boom and Bust Banking: The Causes and Cures of the Great Recession .Independent Institute . pp. 129– 165.ISBN 978-1-59813-076-8 Sumner, Scott (November 25, 2021)."The politics of carbon taxes versus clean energy subsidies" .The Hill . Capitol Hill Publishing Corporation. RetrievedMarch 1, 2022 . Sumner, Scott (July 8, 2021)."An economist's perspective on 'gain-of-function' virus research" .The Hill . Capitol Hill Publishing Corporation. RetrievedNovember 2, 2021 . Sumner, Scott (April 29, 2021)."Should we worry about inflation? Not yet" .The Hill . Capitol Hill Publishing Corporation. RetrievedJune 3, 2021 . Sumner, Scott (February 17, 2021)."Beware the new price bubbles? Not so fast" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (January 6, 2021)."Lessons from the pandemic: Don't let the perfect be the enemy of the good" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (September 17, 2020)."New Fed approach takes inflation targeting more seriously" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (August 12, 2020)."Can the Fed reduce racial inequality?" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (January 15, 2020)."Trump's policies are increasing, not decreasing, the trade deficit" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (June 21, 2019)."Crafting monetary policy for the 21st century economy" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (April 10, 2019)."A better Modern Monetary Theory" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (February 23, 2019)."The Fed steers the ship, but we deserve to know where we're headed" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (January 25, 2019)."Tax-and-spend progressives put faith in flawed policy theory" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (October 7, 2018)."In search of real — not nominal — wage gains" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (August 19, 2018)."An even bigger China shock" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (July 2, 2018)."The Federal Reserve must modernize its approach" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (October 20, 2017)."Lessons from 'Black Monday': It's not easy to spot bubbles" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (February 14, 2017)."Three Recommendations for Monetary Policy Compromise" .The Hill . Capitol Hill Publishing Corporation. RetrievedApril 18, 2021 . Sumner, Scott (December 26, 2017)."Low Inflation Nation" .U.S. News & World Report . RetrievedApril 18, 2021 . Sumner, Scott (July 10, 2017)."Demystify the Fed" .U.S. News & World Report . RetrievedApril 18, 2021 . Sumner, Scott; Horan, Patrick (May 30, 2017)."Fed Up With Congress" .U.S. News & World Report . RetrievedApril 18, 2021 . Sumner, Scott (October 19, 2021)."The Princeton School and the Zero Lower Bound" . Mercatus Center. Horan, Patrick; Sumner, Scott; Beckworth, David; Russo, Christopher M. (July 12, 2021)."What's Going On at the Federal Reserve?" .Discourse . Mercatus Center. RetrievedNovember 2, 2021 . Sumner, Scott (November 23, 2020)."A Critique of Interest Rate–Oriented Monetary Economics" . Mercatus Center. Sumner, Scott; Erdmann, Kevin (August 4, 2020)."Housing Policy, Monetary Policy, and the Great Recession" . Mercatus Center. Sumner, Scott; Horan, Patrick (April 2, 2020)."Reforming the Fed's Toolkit and Quantitative Easing Practices: A Plan to Achieve Level Targeting" . Mercatus Center. Sumner, Scott (February 18, 2020)."Currency Manipulation, Saving Manipulation, and the Current Account Balance" . Mercatus Center. Sumner, Scott (February 18, 2020)."Currency Manipulation: Reframing the Debate" . Mercatus Center. Sumner, Scott (September 12, 2019)."Should the Fed Pay Interest on Bank Reserves?" . Mercatus Center. Sumner, Scott (August 27, 2019)."The Relationship between Interest Rates and Monetary Policy" . Mercatus Center. Sumner, Scott (August 13, 2019)."How the Fed Controls Monetary Policy" . Mercatus Center. Sumner, Scott (April 25, 2019)."Understanding the Federal Reserve" . Mercatus Center. Sumner, Scott; Horan, Patrick (March 11, 2019)."How Reliable Is Modern Monetary Theory as a Guide to Policy?" . Mercatus Center. Sumner, Scott (November 15, 2018)."How to Improve Fed Accountability and Transparency" . Mercatus Center. Sumner, Scott (October 8, 2018)."How Prediction Markets Can Improve Monetary Policy: A Case Study" . Mercatus Center. Sumner, Scott (July 2, 2018)."Explaining Quantitative Easing" . Mercatus Center. Sumner, Scott; Roberts, Ethan (March 19, 2018)."The Promise of Nominal GDP Targeting" . Mercatus Center. Sumner, Scott (September 11, 2013)."Why the Fiscal Multiplier is Roughly Zero" . Mercatus Center. Sumner, Scott (July 24, 2013)."A Market-Driven Nominal GDP Targeting Regime" . Mercatus Center. Sumner, Scott (October 23, 2012)."The Case for Nominal GDP Targeting" . Mercatus Center. Sumner, Scott (2016)."Nudging the Fed Toward a Rules-Based Policy Regime" (PDF) .Cato Journal 36 (2). Cato Institute:315– 335. Sumner, Scott B. (2014)."Nominal GDP Targeting: A Simple Rule to Improve Fed Performance" (PDF) .Cato Journal 34 (2). Cato Institute:315– 337. Sumner, Scott (December 2, 2013)."Central Banks Can and Do Hit Inflation Targets" .Cato Unbound . Cato Institute. Sumner, Scott (November 25, 2013)."Asset Prices, Inflation, and Interest Rates" . Cato Institute. Sumner, Scott (November 22, 2013)."The Fed Was a Mistake. But Now That We Have It…" . Cato Institute. Sumner, Scott (November 8, 2013)."In Defense of a Flexible Monetary Policy" . Cato Institute. Sumner, Scott (Fall 2011)."Re-Targeting the Fed" .National Affairs Sumner, Scott (October 1, 2009)."Final Thoughts and Thanks" .Cato Unbound . Cato Institute. Sumner, Scott (September 30, 2009)."We Can't Agree on Everything, George…" .Cato Unbound . Cato Institute. Sumner, Scott (September 29, 2009)."Defining the Stance of Monetary Policy Is Harder than It Looks" .Cato Unbound . Cato Institute. Sumner, Scott (September 29, 2009)."Clearing up Some Miscommunication" .Cato Unbound . Cato Institute. Sumner, Scott (September 28, 2009)."Score-Keeping with Selgin" .Cato Unbound . Cato Institute. Sumner, Scott (September 25, 2009)."From Discretion to Futures Targeting, One Step at a Time" .Cato Unbound . Cato Institute. Sumner, Scott (September 23, 2009)."Almost on the Money: Replies to Hamilton, Selgin, and Hummel" .Cato Unbound . Cato Institute. Sumner, Scott (September 14, 2009)."The Real Problem was Nominal" .Cato Unbound . Cato Institute. Sumner, Scott (2002)."Some Observations on the Return of the Liquidity Trap" (PDF) .Cato Journal 21 (3). Cato Institute:481– 490. Sumner, Scott B. (March 28, 2018)."The problem with central bankers' inflation preoccupation" .CapX Centre for Policy Studies . RetrievedApril 18, 2021 . Sumner, Scott B. (November 2, 2017)."Trump wants a non-economist to lead the Fed. That could be dangerous" .The Washington Post Nash Holdings . RetrievedApril 18, 2021 . Sumner, Scott B. (2016)."The Fed and the Great Recession: How Better Monetary Policy Can Avert the Next Crisis" .Foreign Affairs Council on Foreign Relations . Sumner, Scott B. (May 13, 2016)."The Curious Rise of the Push for $15 Wage" .Orange County Register Digital First Media . RetrievedApril 18, 2021 . Sumner, Scott B. (February 4, 2016)."Are Congress and the Fed Repeating the Mistakes of the Depression?" .The Fiscal Times . RetrievedApril 18, 2021 . Sumner, Scott B. (December 4, 2015)."Translating 'Fedspeak' into English Shouldn't Be So Hard" .American Banker Arizent . RetrievedApril 18, 2021 . Sumner, Scott B. (October 2015)."Milton Friedman Saw the Euro Crisis Coming" .Reason Reason Foundation . RetrievedApril 18, 2021 . Sumner, Scott; Erdmann, Kevin (June 8, 2015)."Here's What's Driving Inequality" .National Review . RetrievedApril 18, 2021 . Sumner, Scott (March 2015)."What Would Milton Friedman Have Thought of the Great Recession?" .The American Journal of Economics and Sociology 74 (2).Wiley-Blackwell :209– 235.doi :10.1111/ajes.12097 Sumner, Scott B. (March 1, 2015)."Is It Fair to Tax Capital Gains at Lower Rates Than Earned Income?" .The Wall Street Journal News Corp . RetrievedApril 18, 2021 . "Economists on the Welfare State and the Regulatory State: Why Don't Any Argue in Favor of One and Against the Other?" (PDF) .Econ Journal Watch 12 (1).Fraser Institute :2– 14. RetrievedApril 18, 2021 .Sumner, Scott B. (August 6, 2013)."A new way to run the U.S. economy" .Politico . RetrievedApril 18, 2021 . Sumner, Scott; Jackson, Aaron L. (October 2006). "Velocity Futures Markets: Does the Fed Need A Structural Model?".Economic Inquiry 44 (4).Wiley-Blackwell :716– 728.doi :10.1093/ei/cbj044 . Sumner, Scott (2000). "Is Nonprice Competition in Currency Inefficient?".Journal of Money, Credit and Banking 32 (1).Ohio State University Press :146– 149.doi :10.2307/2601097 .JSTOR 2601097 . Sumner, Scott; Gulley, O. David; Newman, Ross (1998). "Money demand and nominal debt: An equilibrium model of the liquidity effect".Journal of Macroeconomics 20 (2).Elsevier :267– 293.doi :10.1016/S0164-0704(98)00057-3 . Sumner, Scott (November 1997). "Reply to Garrison and White".Journal of Money, Credit and Banking 29 (4).Ohio State University Press :542– 545.doi :10.2307/2953713 .JSTOR 2953713 . Sumner, Scott (February 1995). "The Impact of Futures Price Targeting on the Precision and Credibility of Monetary Policy".Journal of Money, Credit and Banking 27 (1).Wiley-Blackwell :89– 106.doi :10.2307/2077852 .JSTOR 2077852 . Sumner, Scott; Silver, Stephen (January 1995). "Nominal and Real Wage Cyclicality during the Interwar Period".Southern Economic Journal 61 (3).Southern Economic Association :109– 118.JSTOR 1060983 . Sumner, Scott (October 1994). "A Note on the Viability of an 'Indirectly Convertible' Gold Standard".Southern Economic Journal 61 (2).Southern Economic Association :530– 533.doi :10.2307/1059998 .JSTOR 1059998 . Sumner, Scott (March 1993). "Colonial Currency and the Quantity Theory of Money: A Critique of Smith's Interpretation".The Journal of Economic History 53 (1).Cambridge University Press :139– 145.doi :10.1017/S0022050700012420 .JSTOR 2123179 .S2CID 155035369 . Sumner, Scott (February 1993). "Privatizing the Mint".Journal of Money, Credit and Banking 25 (1).Ohio State University Press :13– 29.doi :10.2307/2077817 .JSTOR 2077817 . Sumner, Scott (1992). "The Gold Standard, Monetary Policy, and the Banking School - Currency School Debate".Eastern Economic Journal 18 (3).Palgrave Macmillan :345– 358.JSTOR 40325457 . Sumner, Scott (February 1990). "The Forerunners of 'New Monetary Economics' Proposals to Stabilize the Unit of Account: Note".Journal of Money, Credit and Banking 22 (1).Ohio State University Press :109– 118.doi :10.2307/1992131 .JSTOR 1992131 . Sumner, Scott; Grubaugh, Stephen (August 1989). "Commodity Prices, Money Surprises, and Fed Credibility: Comment".Journal of Money, Credit and Banking 21 (3).Ohio State University Press :407– 408.doi :10.2307/1992424 .JSTOR 1992424 . Sumner, Scott; Silver, Stephen (June 1989). "Real Wages, Employment, and the Phillips Curve".Journal of Political Economy 97 (3).University of Chicago Press :706– 720.doi :10.1086/261623 .JSTOR 1830462 .S2CID 154849270 . ^ "It's all demand side" .^a b Greeley, Brendan (November 1, 2012)."The Blog That Got Bernanke to Go Big" .Bloomberg Businessweek . Archived fromthe original on November 5, 2012. ^ O'Brien, Matthew (May 2, 2012)."A Rebellion at the Federal Reserve?" .The Atlantic ^ Thompson, Derek (September 14, 2012)."The Blogger Who Saved the Economy" .The Atlantic . ^ "Scott B. Sumner" .Bentley University . RetrievedJanuary 18, 2011 .^ Krugman, Paul (March 2, 2009)."A Quick Response to Scott Sumner" .New York Times . RetrievedJanuary 18, 2011 . ^ Sumner, Scott (December 14, 2010)."Money Rules" .The National Review . RetrievedJanuary 18, 2011 . ^ Evans-Pritchard, Ambrose (November 27, 2011)."Should the Fed save Europe from disaster?" .The Telegraph . RetrievedDecember 1, 2011 . ^ Berrett, Dan (January 8, 2012). "Chronicle of Higher Education . ^ Wittmeyer, Alicia P. Q. (November 26, 2012)."The FP Top 100 Global Thinkers" .Foreign Policy The Slate Group . RetrievedNovember 26, 2012 . ^a b Hamilton, Scott (April 10, 2011)."Bank of England Should Replace Inflation Targeting, Sumner Says" .Bloomberg . RetrievedApril 13, 2011 . ^ "Reserve Bank rejects report on system flaws" .NZPA . April 13, 2011. RetrievedApril 15, 2011 .^ Sumner, Scott."Monetary regimes in your review mirror may be closer than they appear" . RetrievedDecember 1, 2011 . ^ Yglesias, Matthew (May 18, 2012)."Don't Believe The "Taxmageddon" Hype" .Slate . RetrievedMay 29, 2012 . ^ "Fiscal cliffs, multipliers, and the myth of central bank independence" .The Economist . May 23, 2012. RetrievedMay 29, 2012 .^ Yglesias, Matt (October 8, 2015)."The most important paragraph in Ben Bernanke's new book" .Vox . RetrievedApril 25, 2022 . ^ Chait, Jonathan (February 28, 2011)."Should Liberals Be More Grateful To Grover Norquist?" .The New Republic . RetrievedApril 25, 2022 . ^ Worstall, Tim (February 26, 2016)."Robert Shiller's Answer To Scott Sumner: Bubbles Exist Because Markets Aren't Necessarily Complete" .Forbes . RetrievedApril 25, 2022 . ^ "Macho men and scaredy-cats" .TheMoneyIllusion . RetrievedApril 27, 2024 .^ "The new axis of evil" .TheMoneyIllusion . RetrievedApril 27, 2024 .^ "cHiNa iS tHe reAL thReAt" .TheMoneyIllusion . RetrievedFebruary 25, 2022 .^a b "Trump loves Putin" .TheMoneyIllusion . RetrievedFebruary 25, 2022 .^ "Trump says Putin 'a leader far more than our president' .BBC News . September 8, 2016. RetrievedFebruary 25, 2022 .
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