Modeling Monopoly Money: Government as the Source of the Price Level and Unemployment

Sam Levey

Economics Working Paper Archive from Levy Economics Institute

Abstract: Many of the claims put forth by Modern Monetary Theory (MMT) center around the state's monopoly over its own currency. In this paper I interrogate the plausibility of two claims: 1) MMT’s theory of the price level--that the price level is a function of prices paid by government when it spends--and 2) the claim that the cause of deficient effective demand is the state's failure to supply government liabilities so as to meet the demand for net financial assets. I do so by building a model of "monopoly money" capable of producing these two outcomes.

Keywords: Modern Monetary Theory; Price Level; Monopoly Money; Durapoly; Deficient Effective Demand (search for similar items in EconPapers)
JEL-codes: B52 D42 E4 E62 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-cba, nep-isf, nep-mac, nep-mon and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:lev:wrkpap:wp_992

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