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The Empirical and Institutional Limits of Modern Money Theory

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  • Gerald Epstein

Abstract

Modern Money Theory (MMT) economists acknowledge a number of empirical and institutional limitations on the applicability of MMT to macroeconomic policy, but they have not attempted to explore these empirically nor have they adequately addressed their implications for MMT’s main macroeconomic policy proposals. This paper identifies some of these important limitations, including those stemming from modern international financial markets, and argues that they are much more binding on the policy applicability of MMT than many of MMT’s advocates appear to recognize.

Suggested Citation

  • Gerald Epstein, 2020. "The Empirical and Institutional Limits of Modern Money Theory," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(4), pages 772-780, December.
    • Handle: RePEc:sae:reorpe:v:52:y:2020:i:4:p:772-780
    DOI: 10.1177/0486613420912464
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    References listed on IDEAS

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    Cited by:

    1. Aloys L. Prinz & Hanno Beck, 2021. "Modern Monetary Theory: A Solid Theoretical Foundation of Economic Policy?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 49(2), pages 173-186, June.

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    More about this item

    Keywords

    modern money theory; monetary policy; fiscal policy; exorbitant privilege; full employment; public debt;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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