Bill Mitchell – The IS-LM framework – Part 1

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.

NOTE: Randy and I discussed at length how much mainstream analysis we would include in the textbook. Clearly, we have a responsibility to provide students with an understanding of the tools that are used in the profession including those that are frequently referred to in the policy debate.

As you will see from the Table of Contents (information below), I think we have been fairly generous in how much of the mainstream material, which we see as having no analytical veracity or policy relevance, we have included.

This Chapter is about IS-LM analysis, a framework we also reject outright. However, during the current crisis, it has been used by notable economists who have held it out as an approach that still has relevance. In that vein we have decided to include it as a separate chapter even though, at first, we had excluded it from the book.

However, we don’t go the next step and derive and utilise the full AD-AS model that flows from the IS-LM approach and is the main organising framework for the orthodox exposition.

The Home Page for the Textbook is now available but the material is still being added and the site won’t be fully functional for some months yet. We have nearly agreed on the Table of Contents, which defines the order of exposition of the pedagogy. You can find the site at http://www.mmtonline.net and the Table of Contents is available there.

Note I still haven’t finished the British-IMF Case Study but the sequencing needs for a class that is using the book this semester requires I get the IS-LM Chapter completed first – over the next couple of weeks.

Chapter 16 – The IS-LM Framework

16.1 Introduction

Bill Mitchell – billy blog
The IS-LM framework – Part 1
Bill Mitchell