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Beyond Modern Money Theory: a Post-Keynesian approach to the currency hierarchy, monetary sovereignty, and policy space

Author

Listed:
  • Daniela Prates

    (Senior Economic Affairs Officer, United Nations Conference on Trade and Development (UNCTAD) and Associate Professor of Economics (on leave), University of Campinas, Brazil)

Abstract

This paper provides an alternative view of monetary sovereignty (MS) from the Neo-Chartalist approach found in the Modern Money Theory literature. The differences between the author's approach to MS and Neo-Chartalism cover the following aspects: the nature of money, the acceptability of money, and the relationship between the central bank and the Treasury. The paper then analyses the relationship between MS, the currency hierarchy (CH), and policy space. The focus is placed on emerging-market economies. It is argued that emerging-market economies' policy space is determined by the interplay of two factors: the degree of MS and the position of national money (that encompasses the state and bank monies) within the CH.

Suggested Citation

  • Daniela Prates, 2020. "Beyond Modern Money Theory: a Post-Keynesian approach to the currency hierarchy, monetary sovereignty, and policy space," Review of Keynesian Economics, Edward Elgar Publishing, vol. 8(4), pages 494–511-4, October.
    • Handle: RePEc:elg:rokejn:v:8:y:2020:i:4:p494-511
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    Citations

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    Cited by:

    1. Botta, Alberto & Porcile, Gabriel & Spinola, Danilo & Yajima, Giuliano Toshiro, 2023. "Financial integration, productive development and fiscal policy space in developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 175-188.
    2. Giuliano Toshiro Yajima, 2021. "The Employer of Last Resort Scheme and the Energy Transition: A Stock-Flow Consistent Analysis," Economics Working Paper Archive wp_995, Levy Economics Institute.
    3. Assa, Jacob & Morgan, Marc, 2024. "The General Relativity of Fiscal Space: Theory and Applications," Working Papers unige:176185, University of Geneva, Paul Bairoch Institute of Economic History.
    4. Olk, Christopher, 2024. "How much a dollar cost: Currency hierarchy as a driver of ecologically unequal exchange," World Development, Elsevier, vol. 180(C).
    5. Pedrosa, Ítalo & Brochier, Lídia & Freitas, Fabio, 2023. "Debt hierarchy: Autonomous demand composition, growth and indebtedness in a Supermultiplier model," Economic Modelling, Elsevier, vol. 126(C).
    6. Mark Diesendorf & Steven Hail, 2022. "Funding of the Energy Transition by Monetary Sovereign Countries," Energies, MDPI, vol. 15(16), pages 1-14, August.
    7. De Conti, Bruno & Breda, Diógenes & Welle, Arthur, 2023. "Capitalism in Brazil and COVID-19: crisis, repercussions and responses to the pandemic," IPE Working Papers 217/2023, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    8. Kuehnlenz, Sophia & Orsi, Bianca & Kaltenbrunner, Annina, 2023. "Central bank digital currencies and the international payment system: The demise of the US dollar?," Research in International Business and Finance, Elsevier, vol. 64(C).
    9. Biagio Bossone, 2021. "Global Capital, the Exchange Rate, and Policy (In)Effectiveness," Working Papers PKWP2113, Post Keynesian Economics Society (PKES).

    More about this item

    Keywords

    monetary sovereignty; currency hierarchy; policy space; Modern Money Theory; Post-Keynesian theory; emerging-market economies;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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