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Noah Smith — Examining an MMT model in detail

Summary:
Ha ha. Noah Smith criticizes an MMT formal model expressed in words rather than equations (which he thinks is OK as a formal method and as a logician, I agree) based on, wait for it, unrealistic assumptions, which is exactly the same thing that heterodox economists accuse conventional economists of doing, that is, if one considered John Maynard Keynes himself to be a heterodox economist.MMT economists should not fall into the trap of trying to mimics the mainstream in creating formal models, even conceptual ones, that mimic the mainstream. It is a failed methodology, and it won't work for MMT either, for all the reasons that Keynes gave in his criticism of Tinbergen's econometric approach and more.If you are into modeling, this may be a useful read. Otherwise, forget it.Oh, and Noah

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Ha ha. Noah Smith criticizes an MMT formal model expressed in words rather than equations (which he thinks is OK as a formal method and as a logician, I agree) based on, wait for it, unrealistic assumptions, which is exactly the same thing that heterodox economists accuse conventional economists of doing, that is, if one considered John Maynard Keynes himself to be a heterodox economist.

MMT economists should not fall into the trap of trying to mimics the mainstream in creating formal models, even conceptual ones, that mimic the mainstream. It is a failed methodology, and it won't work for MMT either, for all the reasons that Keynes gave in his criticism of Tinbergen's econometric approach and more.

If you are into modeling, this may be a useful read. Otherwise, forget it.

Oh, and Noah Smith picks up on Brad DeLong's low ball criticism of MMT as guru-based economics. It seems that Noah and Brad have a mutually appreciation affair going on. They deserve each other.

BTW, the "debate" between MMT and economists critical of MMT is becoming more personal and is descending into mud-slinging. Unprofessional to say the least. The excuse is readily available, however. Macroeconomics as a "policy science" is more about politics than economics, and politics is inherently a dirty business.

Noahpinion
Examining an MMT model in detail

Noah Smith

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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