I almost felt like we are after reading this comment from Aki Suomela:
"With this clarification, I think I'm in the majority. I'm also a New Monetarist."
http://diaryofarepublicanhater.blogspot.com/2013/12/stephen-williamson-vs-nick-row-in-epic.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
My reaction was something like Great! Now if you could just clarify it to me!! Because I still have no idea what Stephen Williamson is about, certainly not for any want of trying. Then I clicked Aki's link and discovered that-yep, he's trying to sell something.
So what is New Monetarism all about? I do think that the confusion that's bubbled since his post last week has nevertheless been great for SW. I notice that he's been very prolific-for him, as he now already has 8 posts for the month-this is already more than he's had any other month this year and it's only the 9th.
What is New Monetarism? It is not Market Monetarism. SW clearly has little brief for MM
"NGDP targeting does not do anything other than specify the Fed's ultimate goals. As such, there are two problems with it. The first is the absence of a sound theory to justify NGDP targeting. It is unclear why an economy in which NGDP grows at a constant rate is an economy in which the central bank is doing what is optimal. Second, one can imagine circumstances under which particular NGDP targets will not be feasible."
http://diaryofarepublicanhater.blogspot.com/2012/06/scott-sumner-stephen-williamson-dust-up.html
What's actually very confusing is where the 'Monetarist' in New Monetarist comes from. SW sounds pretty pessimistic about the Fed being able to get us out of this mess, much less on its lonesome.
"What I hope the discussion above makes clear is that this is a trap for the Fed. There is not much that the Fed can do on its own about the short supply of liquid assets. They can get some action from QE, but the matter is mostly out of their hands, and more QE actually pushes the Fed further from its inflation goal. If the Fed actually wants more inflation, the nominal interest rate on reserves will have to go up. Of course that will lead to some short-term negative effects because of money nonneutralities."
http://diaryofarepublicanhater.blogspot.com/2013_11_01_archive.html
Where is the Monetarism? Maybe here?
""What's the difference between a New Keynesian, an Old Monetarist, and a New Monetarist? A New Keynesian thinks no assets matter, an Old Monetarist thinks that some of the assets matter, and a New Monetarist thinks all of the assets matter."
http://diaryofarepublicanhater.blogspot.com/2013/12/bob-murphys-touching-concern-for.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
David Glasner also suggests that SW does aspire to be like Friedman.
" "Here’s how I understand what Williamson is trying to do. I am not confident in my understanding, because Williamson’s first post was very difficult to follow. He started off with a series of propositions derived from Milton Friedman’s argument about the optimality of deflation at the real rate of interest, which implies a zero nominal interest rate, making it costless to hold money. Liquidity would be free, and the liquidity premium would be zero."
My impression based on what I've read him say before-though I can't find it now-is that SW takes as a major point of departure Friedman's k growth rule. Just the same, SW is a 'Monetarist' who thinks the Fed is trapped, that the way out is for the government to give us more public debt. About the only thing he seems to have in common with Sumner is Krugman bashing.
So I don't have the whole story yet. Anyone care to elaborate is welcome. Aki are you out there?
P.S. You may well notice that the key for me is that I'm assuming that there is something of interest going on here. I mean SW may either be dead wrong or dead right or some point somewhere between yet I think that understanding this may well provide a number of clues to some of the big debates of the last couple years.
Nick Rowe clearly is quite frustrated by SW-but what exactly is it that he objects to? Is it because SW said-or seemed to be saying that raising the nominal interest rate would give us more inflation? Yet SW insists that's not what he's doing.
http://diaryofarepublicanhater.blogspot.com/2013/12/stephen-williamson-vs-nick-row-in-epic.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
"With this clarification, I think I'm in the majority. I'm also a New Monetarist."
http://diaryofarepublicanhater.blogspot.com/2013/12/stephen-williamson-vs-nick-row-in-epic.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
My reaction was something like Great! Now if you could just clarify it to me!! Because I still have no idea what Stephen Williamson is about, certainly not for any want of trying. Then I clicked Aki's link and discovered that-yep, he's trying to sell something.
So what is New Monetarism all about? I do think that the confusion that's bubbled since his post last week has nevertheless been great for SW. I notice that he's been very prolific-for him, as he now already has 8 posts for the month-this is already more than he's had any other month this year and it's only the 9th.
What is New Monetarism? It is not Market Monetarism. SW clearly has little brief for MM
"NGDP targeting does not do anything other than specify the Fed's ultimate goals. As such, there are two problems with it. The first is the absence of a sound theory to justify NGDP targeting. It is unclear why an economy in which NGDP grows at a constant rate is an economy in which the central bank is doing what is optimal. Second, one can imagine circumstances under which particular NGDP targets will not be feasible."
http://diaryofarepublicanhater.blogspot.com/2012/06/scott-sumner-stephen-williamson-dust-up.html
What's actually very confusing is where the 'Monetarist' in New Monetarist comes from. SW sounds pretty pessimistic about the Fed being able to get us out of this mess, much less on its lonesome.
"What I hope the discussion above makes clear is that this is a trap for the Fed. There is not much that the Fed can do on its own about the short supply of liquid assets. They can get some action from QE, but the matter is mostly out of their hands, and more QE actually pushes the Fed further from its inflation goal. If the Fed actually wants more inflation, the nominal interest rate on reserves will have to go up. Of course that will lead to some short-term negative effects because of money nonneutralities."
http://diaryofarepublicanhater.blogspot.com/2013_11_01_archive.html
Where is the Monetarism? Maybe here?
""What's the difference between a New Keynesian, an Old Monetarist, and a New Monetarist? A New Keynesian thinks no assets matter, an Old Monetarist thinks that some of the assets matter, and a New Monetarist thinks all of the assets matter."
http://diaryofarepublicanhater.blogspot.com/2013/12/bob-murphys-touching-concern-for.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
David Glasner also suggests that SW does aspire to be like Friedman.
" "Here’s how I understand what Williamson is trying to do. I am not confident in my understanding, because Williamson’s first post was very difficult to follow. He started off with a series of propositions derived from Milton Friedman’s argument about the optimality of deflation at the real rate of interest, which implies a zero nominal interest rate, making it costless to hold money. Liquidity would be free, and the liquidity premium would be zero."
My impression based on what I've read him say before-though I can't find it now-is that SW takes as a major point of departure Friedman's k growth rule. Just the same, SW is a 'Monetarist' who thinks the Fed is trapped, that the way out is for the government to give us more public debt. About the only thing he seems to have in common with Sumner is Krugman bashing.
So I don't have the whole story yet. Anyone care to elaborate is welcome. Aki are you out there?
P.S. You may well notice that the key for me is that I'm assuming that there is something of interest going on here. I mean SW may either be dead wrong or dead right or some point somewhere between yet I think that understanding this may well provide a number of clues to some of the big debates of the last couple years.
Nick Rowe clearly is quite frustrated by SW-but what exactly is it that he objects to? Is it because SW said-or seemed to be saying that raising the nominal interest rate would give us more inflation? Yet SW insists that's not what he's doing.
http://diaryofarepublicanhater.blogspot.com/2013/12/stephen-williamson-vs-nick-row-in-epic.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29
My snarky response to the question of "What is New Monetarism" is that just like the New Keynesians aren't Keynesian at all, they are really monetarists who use NIPA accounting to measure Fed activities, the New Monetarists aren't monetarists at all. They don't think the Fed can do whats needed which makes them non monetarist.
ReplyDeleteOyyyyy, who can keep up with all these changing labels
I know it Greg. Maybe that was SW's point-a kind of mirror image
ReplyDeleteBut would you call SW a fiscalist?
ReplyDeleteWhat SW is anyone's guess. I find him interesting at least. He has always had this one sided feud with Krugman which I still don't get. Still, when you strip it away, at least he's interesting.
ReplyDeleteHe has no brief whatsoever for Sumner and MM.