Scott Sumner

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Scott Sumner

Scott Sumner is the Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University, where he is the director of the Program on Monetary Policy. He is also a professor of economics at Bentley University and Research Fellow at the Independent Institute. In his writing and research, Sumner specializes in monetary policy, the role of the international gold market in the Great Depression, and the history of macroeconomic thought.

Named by Foreign Policy magazine in 2012 as one of the “top 100 global thinkers,” Sumner has published papers in academic journals including the Journal of Political Economy, Economic Inquiry, and the Journal of Money, Credit and Banking. He is author of the popular economics blog The Money Illusion and a contributor to EconLog. His work has appeared in media outlets nationwide and beyond, including the New York Times, Wall Street Journal, BBC, CNBC, The Economist, Financial Times, Politico, The National Interest, and The American.

Sumner received his PhD and MA in economics from the University of Chicago and his BA in economics from the University of Wisconsin.

Published Research

A Market-Driven Nominal GDP Targeting Regime

Scott Sumner | Jul 24, 2013
Central banks have recently done a dreadful job of stabilizing the path of nominal expenditures. The adverse demand shock of 2008–9 led to a severe recession in the United States and Europe. Monetary policy could be greatly improved with a regime of “targeting the forecast,” or setting policy so that the expected growth in nominal GDP is equal to the central bank’s target growth rate. This goal could be accomplished by setting up a nominal GDP futures market and then adjusting the monetary base to stabilize nominal GDP futures prices. The market, not central banks, would set the level of the monetary base and short-term interest rates under this sort of policy regime. Modest adjustments in such a regime could address many previous criticisms of futures targeting.

The Case for Nominal GDP Targeting

Scott Sumner | Oct 23, 2012
The history of central banking is a story of one failure after another. This does not mean our actual monetary regimes have been the worst of all possible regimes—far from it. But it does mean we can improve policy by learn- ing from experience. Every proposed reform is a response to a previous failure, an implicit display of lessons learned.

Policy Briefs

Why the Fiscal Multiplier is Roughly Zero

Scott Sumner | Sep 11, 2013
Many observers have been perplexed by the slow recovery from the 2008 recession. In the United States, Congress passed a nearly $800 billion stimulus in early 2009, yet growth remained sluggish. More recently, a shift toward fiscal austerity does not seem to have noticeably slowed the rate of economic growth.1 This seems to go against the textbook Keynesian model, which says fiscal stimulus has a multiplier effect on GDP; however, we shouldn’t be surprised that fiscal policy seems less effective than anticipated. As we’ll see, fiscal policy ineffectiveness is one byproduct of modern central banking, with its focus on inflation targeting.

Expert Commentary

Are Congress and the Fed Repeating the Mistakes of the Depression?

The Fiscal Times
By Scott Sumner |
Feb 04, 2016

See if this sounds familiar. The economy is in a deep slump. The Fed cuts interest rates close to zero and then tries quantitative easing (QE). A banking crisis begins in the United States and then spreads to Europe, where even sovereign debt is no longer safe. Individual countries are locked into a single monetary regime and unable to stimulate their economies. Am I my describing the Great Recession? Yes, but I’m also describing the Great Depression of the early 1930s. Now let’s push the comparison a bit further.

Translating 'Fedspeak' into English Shouldn't Be so Hard

American Banker
By Scott Sumner, Chad Reese |
Dec 04, 2015

In the debate over letting lawmakers scrutinize Federal Reserve Board policy, there is often confusion between telling the Fed what to do and just being able to know what the central bank does. While many disagree on exactly what level of independence the Fed should have, most will agree that there is some role for congressional oversight, or at least awareness, of monetary policy. For that oversight to occur, however, Congress must have a general understanding of what the Fed is doing, which is no easy task.

Milton Friedman Saw the Euro Crisis Coming

Reason
By Scott Sumner |
Sep 22, 2015

Among the general public, Milton Friedman is mostly remembered for the libertarian views outlined on his PBS show Free to Choose. Among economists, he is best known for his monetarist position on Fed policy. What's less well known is that he was also a soothsayer, accurately predicting the euro crisis that now has the global economy in upheaval. The Nobel laureate believed the boom-and-bust business cycle was mostly caused by central banking errors that allowed a country's money supply to fluctuate.

Here’s What’s Driving Inequality

National Review
By Scott Sumner, Kevin Erdmann |
Jun 08, 2015

Why are wealth and income inequality increasing? Why is labor, relative to capital, commanding a declining share of national income? These have become the central questions in the economics profession, and they’re increasingly central to our political debates as well.
More Expert Commentary

Research Areas

Monetary Policy, Financial Markets

Links

Videos

Scott Sumner Discusses the Greek Financial Crisis on GVH Live

Scott Sumner | July 21, 2015

Scott Sumner Discusses the Greek Financial Crisis on Al Jazeera

Scott Sumner | July 14, 2015

Federal Reserve Reform: Monetary Policy and Beyond

Dino Falaschetti, Stephen Matteo Miller, Hester Peirce, Scott Sumner, J. W. Verret | May 27, 2015
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Books

The Midas Paradox: Financial Markets, Government Policy Shocks, and the Great Depression

Scott Sumner | Dec 01, 2015
The Midas Paradox is a landmark treatise that solves mysteries that have long perplexed economic historians, and corrects misconceptions about the true causes, consequences, and cures of macroeconomic instability. Like Milton Friedman and Anna J. Schwartz’s A Monetary History of the United States, 1867–1960, it is one of those rare books destined to shape all future research on the subject.

Podcasts

Macro Musings 01: Scott Sumner on "The Midas Paradox", the Fed, and More

David Beckworth, Scott Sumner | March 31, 2016
In the inaugural episode of Macro Musings, Scott Sumner joins host David Beckworth to talk about Scott's new book "The Midas Paradox", which advances a bold new explanation of what caused the Great Depression.
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