skip to Main Content

The Weekend Quiz – November 6-7, 2021 – answers and discussion

Here are the answers with discussion for this Weekend’s Quiz. The information provided should help you work out why you missed a question or three! If you haven’t already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of Modern Monetary Theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Read more

MMT economists do not seek to enumerate how many angels can dance on the head of a pin

One of the recurring criticisms that mainstream economists make of Modern Monetary Theory (MMT) is that does not follow the rules of formalism that have become the norm in the economics profession. The implication is that by not following these conventions, MMT economists are unable to say anything precise and scientific. Apparently, a literary discourse cannot convey anything that is sound. Pity that some of the greatest contributions to human knowledge have come from those who could write properly. But this criticism of MMT is about something else again. Dominant academic communities develop their own rules of enquiry, which encompass perspectives of the field to be studied, procedures to be followed, methods and techniques to be used and the end goals of the analysis. If those communities become riddled with Groupthink, then a degree of uniformity in practice becomes expected and enforced either subtly through peer group pressure or more coercively through publication, grant and promotional practices, which effectively determine whether a person will advance or be cast aside. The criticism waged against MMT economists that we don’t follow the normal rules of exposition is really an attempt to enforce the discipline of the mainstream (New Keynesian) community and avoid discussion of substantive issues, such as empirical congruence or extent of anomaly. If the dominant paradigm can convince young scholars and the public that its techniques and methods are the only sound way in which to conduct scientific enquiry and highlight an emerging threat as not being up to speed then it can avoid the scrutiny.

Read more

Corporate welfare abounds

It’s Wednesday, so just a few snippets before some great music from the early 1960s. Over the last few weeks, the commentary in the financial and economic press has been that the ‘market’ has priced in higher inflation and the central banks will have to concede to the market prerogative. Even people I personally like in the media have been running this line and headlines last week included statements like the RBA has run the white flag up. All of this is a self-fulfilling outcome, if every one acts as if there is an imperative to give the ‘markets’ the running, then it will happen. And we should all be clear on what that means. Corporate welfare abounds. And it is not the only example in the last week.

Read more

The pandemic that just keeps giving, and not in a good way!

Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today, he has taken a breather from teaching and exam marking to write about the long-run uneven labour market impacts of the COVID-19 pandemic. The COVID-19 pandemic has been the global emergency that just keeps giving. And not in a good way! Daily figures from around the world show that the pandemic’s health impacts continue to be widely felt. So, it’s over to Scott to explain how.

Read more

Countries than run continuous deficits do not seem to endure accelerating inflation or currency crises

There was a conference in Berlin recently (25th FMM Conference: Macroeconomics of Socio-Ecological Transition run by the Hans-Böckler-Stiftung), which sponsored a session on “The Relevance of Hajo Riese’s Monetary Keynesianism to Current Issues”. One of the papers at that session provided what the authors believed is a damning critique of Modern Monetary Theory (MMT). Unfortunately, the critique falls short like most of them. I normally don’t respond to these increasing attacks on our work, but given this was a more academic critique and I was in an earlier period of my career interested in the work of Hajo Riese, I think the critique highlights some general issues that many readers still struggle to work through.

Read more
Back To Top