Is our theories of macro learning? 03/05/2019 This article gets at something important about what any "theory" of macro needs to explain. Macro needs to explain two apparently contradictory facts: in periods like 1933 and 2008, injecting massive amounts of money into the banking system has little effect. In such a situation, the money supply is "endogenous," meaning that it is determined by economic conditions. There is no way for the central bank to simply set the level of the money supply, because any money they inject will not
This article gets at something important about what any "theory" of macro needs to explain. Macro needs to explain two apparently contradictory facts: in periods like 1933 and 2008, injecting massive amounts of money into the banking system has little effect. In such a situation, the money supply is "endogenous," meaning that it is determined by economic conditions. There is no way for the central bank to simply set the level of the money supply, because any money they inject will not
MMT Rejects Say's Law: That Is Why It Has a Very Conventional View of Inflation 01/12/2019 Ok, I know I said I was done with MMT, but I came across something that was just too good not to discuss. In addition to learning that Abba Lerner was a market socialist who was influenced by Oskar Lange (a favorite whipping boy of some MMTers), I also discovered that MMT has a very conventional view of managing inflation, at least sometimes. But first, some background. I think I am beginning to understand the peculiar way in which MMT understands inflation. Unlike most economists, who view
Ok, I know I said I was done with MMT, but I came across something that was just too good not to discuss. In addition to learning that Abba Lerner was a market socialist who was influenced by Oskar Lange (a favorite whipping boy of some MMTers), I also discovered that MMT has a very conventional view of managing inflation, at least sometimes. But first, some background. I think I am beginning to understand the peculiar way in which MMT understands inflation. Unlike most economists, who view
