Tag Archives: MMT

Applying MMT in the EZ. The likely growth slowdown in the euro area in the coming quarters will be the trigger for this new phase of expansionist fiscal policy. However, uncertainty remains as to the scale and the implementation of the stimulus. If it is up to member countries, the stimulus is likely to be under-supplied as many governments will have little incentive to do much. Europe will face the same free-rider problem as in the past, with countries patiently waiting to benefit from...

President Donald Trump’s top economic adviser praised left-wing Democrat Alexandria Ocasio-Cortez, after the political rivals found common ground in urging the Federal Reserve not to worry about low unemployment triggering inflation. “I’ve got to give her high marks for that,” Larry Kudlow told Fox News on Thursday, referring to Ocasio-Cortez’s quizzing of Federal Reserve Chair Jerome Powell in Congress the previous day.... At least they agree that the Phillips Curve is wrong.Financial...

Last week’s (July 5, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – June 2019 – reveals a steady labour market with month-to-month volatility. The US labour market is still adding jobs, albeit at a slower pace than last year. The unemployment rate remains low (at 3.67 per cent) and the participation rate has moved up a tick, which is a good sign. It is also clear that there is still a substantial jobs deficit...

When the governments in the advanced nations abandoned full employment as an overarching macroeconomic objective, and instead, starting pursuing what I have called full employability, they stopped seeing unemployment as a policy target (to be minimised) and began using it as a policy tool to suppress inflation. As mass unemployment rose, the politics were massaged by the mainstream of my profession who claimed that the level of unemployment that constituted full employment had risen (this...

Abstract This paper presents an alternative presentation of Modern Monetary Theory (MMT). The main thesis of this paper is that when a nation has monetary sovereignty and fiat currency, government is quite flexible its methods in controlling price level through market mechanisms, as Warren Mosler - one of the founders of MMT - often states. The reason given, however, differs from typical MMT or chartalist accounts and comes more from a traditional monetarist origin. This somewhat...

While Lagarde said MMT is no panacea, she didn’t reject it outright.“While it is tempting, when you look at the sort of mathematical modeling of it, and it seems to stand, there are big caveats about it, such as if the country is in a liquidity trap, such as if there is deflation. Well then, in those circumstances, it could possibly work for a short period of time probably, because interest rates stay low until such time when they start going up. And then it is a bit of a trap.”-- April 11,...

Neutral to slightly positive for MMT. NKH News (Japan)Is Japan a "model" for modern monetary theory?Shuji Noguchi | Senior Correspondent, NHK General Bureau for America

Together with Esteban Cruz and Pavlina Tcherneva I have written a chapter in a book on the Eurozone. It has been published by Revista Economica and is available for download here (PDF). This is the abstract…. econoblog 101New chapter on Euro Treasury and Job GuaranteeDirk Ehnts | Lecturer at Bard College Berlin, research assistant at the Technical University of Chemnitz, and spokesperson of the board of Pufendorf-Gesellschaft eV in Berlin

It is Wednesday and so a less intensive blog post. Note how I no longer claim it will be shorter. The less intensive claim refers to how much research I have to put in to write the post. Apart from some beautiful music, the topic for today is yesterday’s RBA decision to cut interest rates to record low levels. The decision won’t save the economy from recession and highlights the sort of desperation that central bankers now face as governments shunt the responsibility of counterstabilisation...

There was an article in the Project Syndicate (July 1, 2019) – Does Japan Vindicate Modern Monetary Theory? – written by a Yale economics professor and advisor to Shinzo Abe, that reveals the extent to which the mainstream is becoming paranoid and is failing to understand what MMT is about. I won’t deal with it in detail because it is not my brief today. But it aims to disabuse readers of the notion that “Japan … [is] … proof that the approach works.”The approach he refers to is MMT....