NGDP Tautology Problem

Kling argues that using nominal GDP growth (NGDP) shortfalls as evidence that monetary policy was contractionary risks circular reasoning: declaring policy 'contractionary' because transactions fell explains nothing unless one independently measures the central bank’s behaviour or the size of real shocks. He urges using observable shock measures and the corridor/adjustment framework (prices, profits, losses) to separate monetary from real causes of recessions. — If accepted, this reframing changes how journalists, policymakers, and courts assign blame for recessions and craft remedies—shifting debate from headline NGDP numbers to concrete indicators of shocks and adjustment failures.