Josh Barro, Columnist

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.

May 3, 2013 at 4:21 PM UTC

By Josh Barro

Josh Barro is the lead writer for the Ticker, Bloomberg View's blog on economics, finance and politics. His primary areas of interest include tax and fiscal policy, state and local government, and planning and land use. Previously, Barro was a Senior Fellow at the Manhattan Institute for Policy Research and a commercial real estate banker at Wells Fargo. He holds a bachelor's degree in psychology from Harvard and lives in Queens, New York.

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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.