Tag Archives: Economics

New MMT macroeconomics textbook This book presents a comprehensive, university level study course in Macroeconomics from a Modern Monetary Theory (MMT) perspective. Our approach is grounded in the operations of real-world institutions, and our approach clearly identifies the policymaking capacity of central governments. The pedagogy thus starts by putting the currency-issuing government​ at the forefront. We want students to understand how a modern monetary...

Labor’s share — the ‘stylized fact’ that isn’t a fact at all According to one of the most widely used textbooks on mainstream theories of economic growth, one can for the United States “calculate labor’s share of GDP by looking at wage and salary payments and compensation for the self-employed as a share of GDP. These calculations reveal that the labor share has been relatively constant over time, at a value of around 0.7.” But is this “classic stylized...

How to get published in top economics journals … The reality is that the mainstream follow a formulaic approach to publications in macroeconomics that goes something like this: Assert without foundation – so-called micro-foundations – rationality, maximisation, rational expectations – imposed assumptions about human behaviour that no sociologist or psychologist would remotely recognise. These foundations cannot deal with real world people so assume there is...

Can a Central Bank ever run out of money?  [embedded content] (h/t: Stephanie Kelton)

Mainstream nonsense about budget deficits The standard mainstream textbook argument about budget deficits goes something like this: Assume that total output is given. If government expenditures are increased, then this has to be met by an equally large decrease in investment, which can only come forth by rising interest rates. ‘Crowding out’ reduces public saving and causes interest rates to rise. Then, applying the logic of the Solow growth model, it is...

Is MMT nothing but Knapp + Lerner + Minsky + Vertical IS curve? Turning to Brad’s challenge, some of the answers will now be obvious. Do we accept the elements he lists as fundamental to MMT? Knapp: yes indeed. He’s always been there … Lerner: dealt with above. What we reject is the aggregate demand approach to full employment and price (and financial) stability. As Minsky argued in the 1960s, pump-priming might get you to full employment but it will never...

How to make economics a relevant science again Economists are struggling to explain recent productivity developments, the implications of rising inequality, the impact of persistently negative interest rates in the eurozone … and the sudden slowdown in European growth … None of this is a huge surprise, given the profession’s embrace of simplistic theoretical assumptions and excessive reliance on mathematical techniques that prize elegance over real-world...

MMT and heterodoxy — necessary for the renewal of economics A sense of failure is, for all intents and purposes, being translated into a context of relative success requiring more limited changes – though these are still being seen as significant. Part of the reason that they are seen as significant is that changes from within mainstream economics do not have to be major in order to appear radical. It is our contention that heterodox economics is being...

Your model is consistent? So what? In the realm of science it ought to be considered of little or no value to simply make claims about the model and lose sight of reality. There is a difference between having evidence for some hypothesis and having evidence for the hypothesis relevant for a given purpose. The difference is important because scientific methods tend to be good at addressing hypotheses of a certain kind and not others: scientific methods come...

Brad DeLong admits neoliberal era has come to an end Should Democrats lean away from market-friendly stances and get comfortable with big government again? Should they embrace an ambitious 2020 candidate like Sanders and policies like the Green New Deal, or stick with incrementalists like former Vice President Joe Biden and more market-oriented ideas like Obamacare? One of the most interesting takes I’ve seen on this debate came from Brad DeLong, an...