Saturday, April 16, 2011

Nick Rowe Reverse-Engineers an MMT Model

Nick Rowe of Worthwhile Canadian Initiative is trying to reverse-engineer a model of MMT to assist mainstream economists in understanding what MMT is saying. There are many good comments, too. Warren Mosler responds early in the thread.

"I'm trying to keep this as simple as possible, so it's accessible to second-year economics undergraduates.

"Many theoretical papers I read are full of impenetrable (to me) thickets of math. So I reverse-engineer the model. I try to figure out what the underlying model must be in order for the paper's conclusions to make sense.

"Many Modern Monetary Theory posts I read are full of impenetrable (to me) thickets of words. So I have reverse-engineered the model (with the help of Steve Randy Waldman's blog post and Scott Fullwiler in comments on that post). I think I have figured out what the underlying model must be in order for MMT's conclusions to make sense.

"I don't think my model is a straw man. It is a stick-figure. A very simple caricature that shows only the bare bones, but is still recognisable."

2 comments:

Rajiv said...

Brad DeLong had a few comments on this - Is "Modern Monetary Theory" Modern or Monetary or a Theory?

Tom Hickey said...

Thanks, Rajiv. I'll promote this to a post.