Friday, September 3, 2021

Monetary Monopoly Model By Sam Levey — Brian Romanchuk

Sam Levey has a new Levy Institute working paper: “Modeling Monopoly Money: Government as the Source of the Price Level and Unemployment.

As I discuss in Section 4.3 of Modern Monetary Theory and the Recovery, the “Monetary Monopoly Model” is the core macro model that captures some of the key ideas of Modern Monetary Theory (MMT). The key concept is that the government needs to set a key price (or a set of prices) in order to determine the price level of a fiat currency. This is contrast to mainstream models, where pinning down the price level is an embarrassing theoretical muddle....
Bond Economics
Monetary Monopoly Model By Sam Levey
Brian Romanchuk

1 comment:

AXEC / E.K-H said...

Note on Brian Romanchuk on ‘Monetary Monopoly Model By Sam Levey’

The price level of a fiat currency has NOTHING to do with the government setting a key price. The correct macroeconomic price formula for the elementary production-consumption economy with profit distribution is given on Wikimedia AXEC177:

Egmont Kakarot-Handtke