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Josh Barro

Jobs Report Doesn't Mean Market Monetarism Has Won -- Yet

Today's jobs report shows that good monetary policy can offset bad fiscal policy, but it's not yet time to say fiscal policy doesn't matter.

After today's good jobs report, my colleague Ramesh Ponnuru needles Paul Krugman: "So, I assume Krugman will now concede that market monetarism is working."

Market monetarism, as advanced by Ponnuru and the economist David Beckworth, among others, holds that aggressive monetary policy is a sufficient force to smooth out business cycles. They favor aggressive monetary action and fiscal austerity, on the ground that monetary forces can offset any fiscal contraction.