I don't mean to use this as a follow-up to my last three posts. I think Steve Roth is right: something interesting is going on with Market Monetarists lately.
Just think of this post as a reminder of how empty economics can be.
Jazzbumpa writes:
Market monetarists like Beckworth and Sumner are smart guys, but their reasoning is flawed. They define monetary policy not in terms of either money or policy, but as GDP growth, which is a resultant. This is either circular reasoning or assuming the conclusion.
That reminded me of something Daniel Kuehn said:
...for market monetarists like Scott Sumner, who seem interested in going beyond decision rules and actually offering an analytic claim, there seems to be no way to logically make the statement "we have done the market monetarist policy rule and the goal was not achieved". Why? Because if NGDP level targets have not been reached then by definition you haven't been doing market monetarist policy.
Fair criticism, I think.
A few days ago Beckworth wrote a post claiming MM success, based on Mike Konczal's Statement in early 2013 that current policy was a great experiment to test MM.
ReplyDeletehttp://macromarketmusings.blogspot.com/2014/07/revisiting-great-experiment-of-2013.html
Of course, he has an ax to grind. But I wonder if his gloating is really warranted.
In the press of other things, I haven't been able to give it any deep thought. My gut feeling is he's over-reaching.
Here's GDP growth.
http://research.stlouisfed.org/fred2/graph/?g=GJl
I see a down-sloping trend channel from Q3 '10.
http://research.stlouisfed.org/fred2/graph/?g=GJl
Which was already the weakest recovery in the record.
Pretty damned weak success story.
Cheers!
JzB
Jazz,
ReplyDeleteMarcus Nunes has about a million graphs that look just like Beckworth's second, where Nunes repeatedly points out that GDP is still well below trend, and that the output gap is wide open.