What modern monetary theory is, and what it is not

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.

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Authors/Creators:	Carnevali, E. Fontana, G. https://orcid.org/0000-0002-8055-5326
Copyright, Publisher and Additional Information:	© 2023 The Author. This is an open access article under the terms of the Creative Commons Attribution License (CC-BY 4.0), which permits unrestricted use, distribution and reproduction in any medium, provided the original work is properly cited.
Keywords:	modern monetary theory; government debt; central banking; inflation; fiscal policy; E31; E52; E58; E62; B52
Dates:	Accepted: 1 June 2022 Published (online): 1 October 2022 Published: 26 May 2023
Institution:	The University of Leeds
Academic Units:	The University of Leeds > Faculty of Business (Leeds) > Economics Division (LUBS) (Leeds)
Depositing User:	Symplectic Publications
Date Deposited:	07 Aug 2023 12:17
Last Modified:	07 Aug 2023 12:17
Status:	Published
Publisher:	Edward Elgar Publishing Ltd.
Identification Number:	https://doi.org/10.4337/ejeep.2022.0088

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What modern monetary theory is, and what it is not

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