by Summary:
The discussion of the role in unemployment is a key theoretical divide between Modern Monetary Theory and mainstream approaches. Theoretical conclusions determine the suggested policy response of governments to unemployment. The structural changes to the labour market made by policymakers in the 1990s were based on following a theory.... One of the objections that conventional economists make to MMT is that it is "nothing new" and can be stated in terms of their models. One of the sharpest distinctions is between the MMT approach to employment and inflation based on fiscal policy and the conventional approach through monetary policy, which is based on NAIRU, an acronym for Non-Accelerating Inflation Rate of Unemployment. The MMT approach is based on the MMT JG and a buffer stock of
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Mike Norman considers the following as important:
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The discussion of the role in unemployment is a key theoretical divide between Modern Monetary Theory and mainstream approaches. Theoretical conclusions determine the suggested policy response of governments to unemployment. The structural changes to the labour market made by policymakers in the 1990s were based on following a theory.... One of the objections that conventional economists make to MMT is that it is "nothing new" and can be stated in terms of their models. One of the sharpest distinctions is between the MMT approach to employment and inflation based on fiscal policy and the conventional approach through monetary policy, which is based on NAIRU, an acronym for Non-Accelerating Inflation Rate of Unemployment. The MMT approach is based on the MMT JG and a buffer stock of
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
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The discussion of the role in unemployment is a key theoretical divide between Modern Monetary Theory and mainstream approaches. Theoretical conclusions determine the suggested policy response of governments to unemployment. The structural changes to the labour market made by policymakers in the 1990s were based on following a theory....
One of the objections that conventional economists make to MMT is that it is "nothing new" and can be stated in terms of their models. One of the sharpest distinctions is between the MMT approach to employment and inflation based on fiscal policy and the conventional approach through monetary policy, which is based on NAIRU, an acronym for Non-Accelerating Inflation Rate of Unemployment. The MMT approach is based on the MMT JG and a buffer stock of employed, whereas NAIRU is based on a theoretical (unobservable) "natural rate of employment" and a buffer stock of unemployed.
A key difference between conventional economics and MMT lies in this distinction between a buffer stock of employed and a buffer stock of unemployed. Any discussion that does not acknowledge this is simply wrong. The gap between MMT and conventional approaches is stark and involves millions of people in the US.
While this is not the only distinction between MMT and conventional economics that cannot be reduced to a conventional model based on conventional theory, it is an important one and proponents of MMT should understand its basics of NAIRU and MMT criticism of it. Brian simplifies this in the post. But knowing that the key difference is a between a buffer stock of employed and a buffer stock of unemployed is sufficient for most purposes.
NAIRU, And Other Will-O'-The-Wisps
Brian Romanchuk
Brian Romanchuk