What modern monetary theory is, and what it is not

Emilio Carnevali and Giuseppe Fontana

European Journal of Economics and Economic Policies: Intervention, 2023, vol. 20, issue 1, 56-66

Abstract: Modern monetary theory (MMT) has grown in popularity in recent years. Several central bankers have made passing comments about it. However, the publication of two papers by Drumetz/Pfister of the Banque de France in 2021 represents the first attempt at a more systematic assessment of MMT by two scholars with knowledge of and experience in central banking. This is a welcome event in the economic debate. The present paper analyses the merits of Drumetz/Pfister’s criticism, and investigates some of the most common sources of ‘misinterpretation’ of MMT.

Keywords: modern monetary theory; government debt; central banking; inflation; fiscal policy (search for similar items in EconPapers)
JEL-codes: B52 E31 E52 E58 E62 (search for similar items in EconPapers)
Date: 2023
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