Mark Sadowski Dismisses Joshua Wojinlower's Paper Out of Hand

     He doesn't seem very interested in reading it-probably because he claims to be basically certain it's wrong anyway. 

     "Our findings strongly contradict the notion of a fixed “money multiplier.”"

     "That's good, because so does empirical reality:

     http://research.stlouisfed.org/fred2/graph/?graph_id=123223&category_id=0

     "Every Econ 102 textbook I've ever seen teaches the money multiplier is a function of three variables. The currency ratio is always portrayed as the depositors' choice, the reserve ratio (above required, if any) is always the lenders' choice, and the total amount of currency and reserves (the monetary base) is the central bank's choice (even if supplied through the discount window), and all are dependent on the conduct of monetary policy by the central bank."

     "From my brief skimming of Joshua's paper I see almost no discussion of the work monetary economists have done (e.g. Sims, Bernanke/Blinder, Christiano/Eichenbaum/Evans etc.) since Friedman and Schwartz published their monetary history half a century ago. In my opinion Joshua is unfairly characterizing what most modern monetary economists actually believe."

    "Nevertheless, good luck to Joshua with getting the paper published. I'm certain that the Journal of Post Keynesian Economics will love it."

     http://diaryofarepublicanhater.blogspot.com/2013/11/cullen-roche-on-qe-joshua-wojinlower.html?showComment=1384637459301#c6339979294752825488

    That last little shot about good luck in finding a publisher makes me think of the snark of Lucas and friends about how peer reviewers in economics don't have any time for the fiscal multiplier as supposedly Lucas and friends debunked it back in about 1981 or so. 

    http://diaryofarepublicanhater.blogspot.com/2013/11/krugman-and-delong-show-lucas-that.html

     Still, Mark's comments about the money multiplier of what  Keynes once said-'First they call you crazy then they say you're all wrong and then they say you've said nothing new.' You can't show that the money multiplier is a fallacious concept as the people who use it have already said that. I recall some posts that Sumner wrote about the money multiplier-Sadowski is basically using the same exact argument here-it's kind of how  economists respond when you call them Neoclassical-deny that there is any such thing as Neoclassical economics. You can't fight Neoclassical economic as it doesn't exist that you can't defeat those that use Rational Expectations because they themselves know it's not true. Here's Sumner on the money multiplier:

     "What a mind-bogglingly empty question!  The money multiplier equals the ratio of the money supply (however defined) and the monetary base.  It’s simply a ratio, there’s nothing to believe or disbelieve.  It’s like asking if someone believes in the ratio of men to women.  Or whether MV=PY."

     "So let’s start over.  Do you believe the money multiplier is stable?   Most economists would answer; “It depends.”  Or how about; “Do you believe the money multiplier is useful?”  Now we are beginning to get somewhere.  For instance, do economists believe that an increase in the monetary base will cause the money supply to rise by an amount equal to the change in the base times the multiplier?  It turns out that the answer is; “No in the short run, but yes in the long run.”

     "What we actually need to do is start with the concept called “the neutrality of money,” which underlies almost all of macroeconomics, and has done so for hundreds of years.  This says that an increase in the monetary base will not affect any real aggregates, and hence all nominal aggregates will rise in proportion.   This suggests there are “multipliers” for every conceivable nominal aggregate, from nominal spending on toasters, to nominal spending on Brazilian waxes, to NGDP.  The “multiplier” for NGDP has a special name; “base velocity.”  But it actually has nothing to do with the velocity of money (the vast majority of money expenditures are not for final goods and services), and should be called the “NGDP multiplier.”

     http://www.themoneyillusion.com/?p=13852

     http://www.themoneyillusion.com/?p=21463

     What Sumner is really saying then is that the money multiplier doesn't matter for the short term: in the long term it does matter as money in the long term is held to be neutral-money being just a veil. 

     Is my claim that Sadowski doesn't care about reading Woj's new post unfair?

     Read comments like the above and then judge where he said he skimmed it. When I asked if he had read the paper, this was his answer:

      I have the paper right in front of me. 

     "The Fed was never at the zero lower bound during 1971-2008. The monetary base was never the instrument of monetary policy during this time period.."

        It's in front of him but did he read it? Woj certainly never claimed that the Fed was at the ZLB from 1971-2008. If he's just going to skim it and proclaim it dead wrong, then that's pretty empty. It would give credence to Cullen Roche's claim that he's not interested in a discussion or debate but simply proselytizing the views he's already sure are 100% right.