Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105998
Authors: 
Palley, Thomas I.
Year of Publication: 
2014
Series/Report no.: 
IMK Working Paper 132
Abstract: 
Eric Tymoigne and Randall Wray's (T&W, 2013) defense of MMT leaves the MMT emperor even more naked than before (excuse the Yogi Berra-ism). The criticism of MMT is not that it has produced nothing new. The criticism is that MMT is a mix of old and new, the old is correct and well understood, while the new is substantially wrong. Among many failings, T&W fail to provide an explanation of how MMT generates full employment with price stability; lack a credible theory of inflation; and fail to justify the claim that the natural rate of interest is zero. MMT currently has appeal because it is a policy polemic for depressed times. That makes for good politics but, unfortunately, MMT's policy claims are based on unsubstantiated economics.
Subjects: 
modern money theory
money financed budget deficits
fiscal policy
JEL: 
E00
E02
E10
E12
E24
E40
E58
E62
E63
Document Type: 
Working Paper

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