Economics at your fingertips  

Modern Money Theory: A Reply to Palley

Eric Tymoigne and L. Randall Wray

Review of Political Economy, 2015, vol. 27, issue 1, 24-44

Abstract: Modern Money Theory (MMT) has explained why monetarily sovereign governments have a very flexible policy space that is unconstrained by hard financial limits. It has provided institutional and theoretical insights about the workings of economies with monetarily sovereign and non-sovereign governments. It has also provided policy insights with respect to financial stability, price stability and full employment. Yet there have been many critics of MMT, including Palley (2014). Critiques of MMT can be grouped into five categories: views about the origins of money and the role of taxes in the acceptance of government currency, views about fiscal policy, views about monetary policy, the relevance of MMT conclusions for developing economies, and the validity of the policy recommendations of MMT. This paper addresses Palley's criticism of MMT using the circuit approach and national accounting identities, and by progressively adding additional economic sectors.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Review of Political Economy is currently edited by Gary Mongiovi, Steve Pressman and Lynne Chester

More articles in Review of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

Page updated 2019-10-16
Handle: RePEc:taf:revpoe:v:27:y:2015:i:1:p:24-44