In discussing claims by Tyler Cowen, Scott Sumner writes:
However I take issue with this claim:
- During the upward phase of the recovery, monetary policy just doesn’t matter that much.
I can’t even imagine what a model would look like where that claim was true. To see why it is not true, compare the post mid-2009 recoveries in the US and Europe. If monetary policy in the US and Europe did not matter very much during the recovery, then the tightening of monetary policy in mid-2011 in the eurozone ought to have had little effect. What does it look like to you?
(The updated chart follows.) It is very compelling evidence against Tyler´s claim: