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A monetary Keynesian view of modern monetary theory

Author

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  • Sebastian Dullien
  • Silke Tober

    (N/A)

Abstract

Both monetary Keynesian theory and modern monetary theory (MMT) place money at the center of the analysis and highlight the important economic role of the state in a monetary market economy in which full employment is neither the norm nor the center of gravity. Whereas monetary Keynesian theory implies that economic policy is considerably constrained by market forces, MMT considers economic policy to be all-powerful and able to ensure full employment. Polarizing MMT policy conclusions such as the proposition that modern states have no budget constraint result from MMT-ers’ neglect of crucial elements of the Keynesian framework. As Hajo Riese tirelessly argued, monetary financing of budget deficits has limits even in the presence of unemployment because the stability of a monetary market economy hinges on the scarcity of its money.

Suggested Citation

  • Sebastian Dullien & Silke Tober, 2022. "A monetary Keynesian view of modern monetary theory," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 19(2), pages 227-237, September.
    • Handle: RePEc:elg:ejeepi:v:19:y:2022:i:2:p227-237
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    File URL: https://www.elgaronline.com/view/journals/ejeep/19/2/article-p227.xml
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    Citations

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    Cited by:

    1. Thomas Palley, 2023. "The theory of monetary disorder: debt finance, existing assets, and the consequences of prolonged ultra-easy policy," PSL Quarterly Review, Economia civile, vol. 76(307), pages 315-335.
    2. Grzegorz Przekota & Andrzej Janowski & Anna Szczepanska-Przekota, 2023. "Causality in the Relationship between Economic Growth and Compensation," Sustainability, MDPI, vol. 15(23), pages 1-16, November.

    More about this item

    Keywords

    modern monetary theory; budget deficits; monetary financing; fiscal policy;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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