Jörg Bibow — On Modern Monetary Theory As Well As Unopen To Strange Twists As Well As Turns Inward The Development Of Macroeconomics
Mainstream neoclassical economic science is hooked on the stance of private worker-savers every bit prime number movers inward capitalist marketplace economies. As workers, individuals select how much to work, determining the economy’s output; every bit savers, they create upward one's heed how much of that output takes the shape of the economy’s majuscule investment. With banks every bit conduits channeling saving flows into investment, firms churn inputs into outputs that check worker-savers’ tastes. In this way, the neoclassical basis gets shaped past times what rational intertemporal utility-maximizing worker-savers wishing it to be....Models depict possible worlds. The mathematical inquiry is how consistent the model is (proof). The scientific inquiry is how closely the model corresponds to the actual basis that the model purportedly represents (evidence).
MMT features the money-first principle: the field has to get-go number its money, either past times literally spending it into beingness or past times having its fundamental depository fiscal establishment buy (“monetize”) assets, for taxpayers to too thus post it dorsum to the treasury every bit taxes. Seen inward this way, taxes produce non “finance” authorities spending. Rather, they are a agency to incorporate inflation depending on the economy’s existent resources constraints (as made clear inward Keynes’s [1940] “How to pay for the war”). Similarly, authorities bond issuance – supposedly collecting loanable funds from worker-savers – is non a agency to “finance” authorities spending either, simply an musical instrument to deal involvement rates (as Keynes made clear inward his reflections on monetary policy too debt management during WWII)....Rather than using formal modeling, MMT uses institutional analysis to depict actual operations based on institutional arrangements, both formal (law, regulation) too informal (operating procedure).
On Modern Monetary Theory too Some Odd Twists too Turns inward the Evolution of Macroeconomics
Jörg Bibow
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