Econ Point of View

Understanding the world through an economic point of view

Brian C. Albrecht

1 minute read

I find Hayek’s argument that policy should foster coordination to be quite convincing. I have previously taken that to mean some sort of conservatism: let policy remain so that people figure it out and then they adjust their plans in accordance with those policies. On the margin, that means we should even keep in place policies that I think are ex ante, such as the ACA.

That makes sense in a word without shocks. But what if technology changes? Is the coordinating device the policy or the outcome? Take taxi medallions. People are coordinated around the old system. Then the shock of Uber comes. Are people coordinating around certain prices, etc? Or are peple coordinating around the policy that these particular cabs have a privelege? What is the implicit agreement?

There is a lot related to monetary policy to think about. Is a particular policy lever, say interest rates, what people coordinate on? Or is it a particular policy outcome, like inflation or NGDP?

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Econ Point of View is a blog by Brian Albrecht, who teaches at Kennesaw State University. EPV began in 2012 and was revamped in 2020.