Naked Keynesianism

My interview with Nicolás Fiorentino and Cecilia Camarano from Led.fm yesterday (in Spanish) on the Argentinian situation and the new central bank policy. [embedded content] I basically suggest that the new policy to control exchange rates using the IMF loans (with IMF authorization) might control the exchange rate, but will finance essentially capital flight, and tries to interfere with the elections later this year.

Shouldn't listen to the IMF anyway New working paper co-authored with Suranjana Nabar-Bhaduri, and published by the Political Economy Research Institute (PERI) from UMass-Amherst. From the abstract:This paper focuses on the different development strategies of China and India, particularly regarding the role of manufacturing and services for long-run productivity growth, external competitiveness and financial fragility. The findings appear to support the argument that productivity...

We are delighted to announce the publication of Volume 7, Issue 2 of the Review of Keynesian Economics. We invite you to visit the website where you can read all the article abstracts and download two free articles.Over the last several years economic recovery has led to some monetary tightening in the United States, but it is likely that a future recession will restore the issue of negative interest rates to the fore of policy debate. That is also true for Europe where there has been a...

By Thomas I. Palley (Guest Blogger)The last decade has witnessed a significant revival of belief in the efficacy of fiscal policy and mainstream economics is now reverting to the standard positions of mid-1970s Keynesianism. On the coattails of that revival, increased attention is being given to the doctrine of Modern Money Theory (MMT) which makes exaggerated claims about the economic costs and capability of money-financed fiscal policy. MMT proponents are now asserting society can enjoy a...

By Thomas I. Palley (guest blogger)Recently, there has been a burst of interest in modern money theory (MMT). The essential claim of MMT is sovereign currency issuing governments do not need taxes or bonds to finance government spending and are financially unconstrained. MMT rests on a triad of arguments concerning: (i) the macroeconomics of money financed budget deficits, (ii) the employer of last resort or job guarantee program, and (iii) the history of money. This primer analyzes that...

Perhaps worth reposting what I said about Russiagate, now that the Mueller Report led to no additional indictments and validated the No Collusion slogan we're going to hear for the next year and a half. Just a brief note on the whole firing of Comey scandal that is still unfolding, and the incredible degree of anxiety on the left, which somehow thinks this means that there is a 'pee' tape and that Trump will be eventually impeached (here, for example; too many of these). This is at least...

In the Eatwell and Taylor book, Global Finance at Risk, they had, I think, a graph with the percentage of corporate bonds in default in the US (I don't have the book here, it's my office). I think this is a close one, with data that is more recent (from this Moody's report). The graph shows corporate bond default rates (and also the speculative-grade bond defaults). Note that defaults fall significantly during the Bretton Woods era of capital controls and low interest rates.

From his recent piece: "Does this mean that 'deficits don’t matter'? I know of no MMT adherent who has made such a claim. MMT acknowledges that policy can be too expansionary and push past resource constraints, causing inflation and exchange-rate depreciation – which may or may not be desirable. (Hyperinflation, on the other hand, is a bogeyman, which some MMT critics deploy as a scare tactic.)"Also, this: "And MMT is not about Congress ordering the Fed to use its “balance sheet as a cash...

So André Lara-Resende, who I discussed here before, is again writing on the crisis of macroeconomics (in Portuguese and you might need to have a subscription), and now instead of embracing the Fiscal Theory of the Price Level (FTPL), has supposedly embraced Modern Money Theory (MMT). Many US MMTers cheered this as a demonstration of the reach of MMT in other countries. I would be less cheerful.Lara-Resende, let me explain to non-Brazilian readers, was a student of Lance Taylor at MIT, and...

Modern Monetary Theory (MMT) has been in the news again, and for good reasons. I actually had a post with the same title back in February of 2012, hence the again in the title. But now, with the irruption of Alexandria Ocasio-Cortez in the political scene ,and with the discussion of a Green New Deal (discussed here 7 years ago) and the feasibility of higher taxes (here, also long ago, among the many on the topic) taking the center of the political debate, MMT has become trendy. The rise...