Modern money theory on fiscal and monetary policies: empirics, theory, and praxis

Eric Tymoigne

European Journal of Economics and Economic Policies: Intervention, 2023, vol. 20, issue 1, 11-22

Abstract: make several claims about the inadequacy and fallacy of modern money theory (MMT) and conclude that MMT is nothing more than a political manifesto; there is no theoretical and empirical foundation beneath it. The present paper addresses this last point by focusing on the fiscal and monetary policy aspects of their criticisms. Contrary to what they claim, MMT is backed by a large body of empirical evidence, a rich institutional analysis, and a well-developed theoretical framework (including mathematical models). MMT provides a detailed analysis of the coordination between the fiscal and monetary branches of government, emphasizes that fiscal deficits are a stylized fact, and uses theoretical tools grounded in institutional realities to explain this stylized fact.

Keywords: modern money theory; monetary policy; fiscal policy; policy coordination; public debt sustainability (search for similar items in EconPapers)
JEL-codes: E12 E58 E61 H62 H63 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:elg:ejeepi:v:20:y:2023:i:1:p11-22

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