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Modern money theory and its challenges Sayuri Shirai

Summary:
Modern monetary theory (MMT) has recently gained prominence in light of doubts about the effectiveness of monetary policy in addressing economic shortfalls. This column assesses the implications of implementing the theory’s policy prescriptions, and the challenges it presents in the case of Japan – an economy that some have argued has already been subject to such policy. Japan’s labour shortages and low inflation mean modern monetary theory’s fiscal stimulus suggestions may be harder to implement than they initially seem.... Stephanie Kelton was recently in Japan talking up MMT. This is a response. It is a serious article on MMT that gets the outline reasonably correct and offers comments on its applicability to conditions in Japan. It's a should-read.VoxEUModern money theory and its

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Modern monetary theory (MMT) has recently gained prominence in light of doubts about the effectiveness of monetary policy in addressing economic shortfalls. This column assesses the implications of implementing the theory’s policy prescriptions, and the challenges it presents in the case of Japan – an economy that some have argued has already been subject to such policy. Japan’s labour shortages and low inflation mean modern monetary theory’s fiscal stimulus suggestions may be harder to implement than they initially seem....
Stephanie Kelton was recently in Japan talking up MMT. This is a response. It is a serious article on MMT that gets the outline reasonably correct and offers comments on its applicability to conditions in Japan. It's a should-read.

VoxEU
Modern money theory and its challenges
Sayuri Shirai | Professor, Keio University; Visiting Scholar to ADB Institute; and, former Board Member, Bank of Japan

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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