Monetary sovereignty and external constraints: Identifying the flaws of modern monetary theory

2024/12/01 by Eduardo Garzón Espinosa · 1 voice
Economics, Econometrics and Finance · #Economic Theory and Policy #Global Financial Crisis and Policies #Housing, Finance, and Neoliberalism

paper · doi:10.1017/elr.2024.62

Abstract

Abstract The concept of monetary sovereignty employed by Modern Monetary Theory has been criticised on many fronts. One of the most important criticisms points out that Modern Monetary Theorists (MMTers) ignore or underestimate problems arising from external constraints. Another important (and complementary) criticism is that MMTers focus only on purely macroeconomic aspects and ignore political and geopolitical issues. In this paper, we discuss these important criticisms and we conclude that, although the MMT concept of monetary sovereignty is useful and can be considered an analytical advance, it is incomplete and biased because it minimises macroeconomic problems arising from external constraints and because it does not take into account international political factors.

Discussions

• Mi regalo de Reyes ha sido la publicación de mi último artículo académico sobre Teoría Monetaria Moderna y restricciones externas en la prestigiosa revista The Economic and Labour Relations Review de [bsky, 43 points, 2 comments]

Related

• Rethinking Monetary Sovereignty: The Global Credit Money System and the State
• MMT and Policy Assignment in an Open Economy Context: Simplicity is Useful, Oversimplification Not So Much
• Exorbitant privilege and compulsory duty: the two faces of the financialised IMS
• The nexus between money and public finance: modern money theory versus orthodox economics
• The rate of interest, economic growth, and inflation. An alternative theoretical perspective.