Tag Archives: MMT

Over the past few years, the economic literature and prominent scholars have paved the way for expansionist fiscal policy. In the US, Modern Monetary Theory proposes to finance a Green New Deal and full employment by increasing the deficit and using the central bank to pay off debt by printing more money. MMT is attracting more and more attention in Europe, including among populist parties, but also beyond, and will certainly be part of the conversation in upcoming elections. Investment to...

This dramatic rise is most likely caused by austerity and the government’s reduction of the deficit, though the post referendum stagnating wages and rise in inflation has also spurred on the level of debt. The relation with public and private debt is one that is of increasing interest to Post-Keynesian economists especially those who put their faith in Modern Monetary Theory. MMT would suggest the dropping government deficit is pushing the rest of us into deficit but the way the government...

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