Modern monetary theory: contributions and critics

Abstract

:Over the past decade or so, a number of post Keynesians have been critical of modern monetary theory (MMT) despite MMT being a part of the post Keynesian tradition. In this paper we argue that the incorporation of MMT principles enhances the post Keynesian theoretical and policy framework. We substantiate this claim by (1) outlining the common theoretical elements that unite post Keynesian and MMT advocates; (2) addressing post Keynesian claims regarding the MMT interpretation of money and the monetary system; and (3) examining the differing perspectives on the role of fiscal policy to achieve sustained full employment.