In a recent post I discussed how Keynesians like Mike Konczal began the year claiming that we were going to have a test of market monetarism, and specifically the doctrine of “monetary offset.”

[As recently as 2007, monetary offset (roughly zero fiscal multiplier) was standard new Keynesian doctrine, and yet by 2010 some bloggers were calling the concept “the Sumner critique.” The fact that it had become so unpopular that they had to name it after a lowly Bentley professor speaks volumes about the recent decline of macroeconomics.]

One way to look at the US economy in 2013 is that it was, in effect, trying to begin a strong recovery, but was held back by terrible federal fiscal policy. Housing was making a comeback, state and local austerity was, if not going into reverse, at least not getting more intense, household spending was starting to revive as debt levels came down. But the feds were raising the payroll tax, slashing spending via the sequester, and more.

Incidentally, these other factors are why I don’t take seriously the claims of market monetarists that the failure of growth to collapse in 2013 somehow showed that fiscal policy doesn’t matter. US austerity, although a really bad thing, wasn’t nearly as intense as what happened in southern Europe; it was small enough that it could be, and I’d argue was, more or less offset by other stuff over the course of a single year.

Where do I begin? Yes, growth did not “collapse” as the Keynesian model predicted. It increased. So say so! There was a dramatic reduction in the cyclically adjusted budget deficit, by any measure. I’m tempted to point out that a reduction in the cyclically-adjusted budget deficit (including the exact same 2% boost in the payroll tax) is what the Keynesians claim caused the severe 1937-38 depression. And yet growth accelerated in 2013. Or I could point out that the fiscal austerity in the US was just as intense as in the eurozone, whereas the unemployment rate in the US has fallen sharply since 2010, while the rate in the eurozone has risen sharply. The key difference was monetary policy, which was much tighter in the eurozone.