One of the things that Modern Monetary Theory (MMT) obviously needs are good short "explainers" aimed at people who already consider themselves experts in economics. (In addition to people trained as economists, that would include market practitioners -- like myself -- who consider themselves macro experts.) There are plenty of primers aimed at people unfamiliar with economics, and academic journal articles -- but not a lot in between. The new textbook -- Macroeconomics, by Mitchell, Wray, and Watts -- covers this ground, but it is lengthy (a textbook), as well as being introductory. As can be seen in an earlier discussion of the book, that misses the mark.
I would obviously like to write such an explainer, but the need for brevity is the problem I face.
If the reader has stumbled onto this article and looking for such an explainer, all I can offer is the following: instead of looking for a one thousand word summary of MMT, look for a one thousand word summary of MMT views on a particular topic.Must-read.
It seems to me that what is needed is a statement of the framework for theorizing, e.g, scope and scale, and a list of specific assumptions, both methodological and substantial, that distinguish MMT from other theoretical approaches to macroeconomics.
For example, neoclassically oriented economics including New Keynesianism assumes equilibrium and maximization (Krugman). MMT assumes a monetary production economy using "modern money." The two theories differ based on articulating the implications of the foundational assumptions.
Bond Economics
Everything You Need To Know About MMT...In One Thousand Words?
Brian Romanchuk
3 comments:
"a list of specific assumptions, both methodological and substantial, that distinguish MMT from other theoretical approaches to macroeconomics."
MMT does NOT differ in methodology at all... they use the same non-scientific approach as the others...
Brian: "However, we run into the concept of inflation being the limit on fiscal policy. Guess what? Modern Monetary Theory follows post-Keynesians in having a different theory of inflation than neoclassicals"
Maybe... but you have a perfect situation to demonstrate that right now with fiscal at all time highs and worker shortages developing and worker wages increasing well above the popular "inflation!" rate of 2% and instead of demonstrating caution, the MMT people are still advocating pedal to the metal fiscal increases for jobs guarantees etc when unemployment is at all time lows and firms cant find people...
They are all caught up in partisan politics and can't vary from the Democrat talking points... if they even understand what is going on in real terms which they may not...
“l increases for jobs guarantees etc when unemployment is at all time lows and firms cant find people...“
Still under employment and lots of jobs which doesn’t cover living costs. Teachers that need to work extra to get by... job guarantee is definitely needed to set a decent living standard floor since the private sector will not do that on their own.
Matt - A Job Guarantee is not a pedal to the metal, by design. If the "private sector" offers full employment, the JG will be small.
People are still terribly paid, especially on the low end compared to the US in its postwar heyday. There is great room for non-inflationary wage increases. Firms might not be able to find people who will take starvation wages. Boo hoo hoo. That's a good thing.
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