Scott Fulwiller — Functional Finance and the Debt Ratio—Part II

This five part series will explore at length (warning!) and in detail (another warning—wonk alert!) the MMT perspective on the debt ratio and fiscal sustainability. While the approach suggests a macroeconomic policy mix and strategies for both fiscal and monetary policies that most neoclassical economists currently believe are unsustainable, ultimately the MMT preference for a significant role for fiscal policy in macroeconomic stabilization is shown to be consistent with traditional neoclassical views on fiscal sustainability.

This second part discusses interest rates on the national debt in the context of a currency issuer operating under flexible exchange rates.

Interest Rates and Flexible Exchange Rates

New Economic Perspectives
Functional Finance and the Debt Ratio—Part II
Scott Fulwiller | James A. Leach Chair in Banking and Monetary Economics and Associate Professor of Economics at Wartburg College