Why MMT Is So Popular (For People Like Me)

In a previous article, I explained why I am complacent about the state of economic theory in Modern Monetary Theory (MMT). This matters for someone like myself, who is attempting to write primers explaining various economic concepts. However, for many followers of MMT, the more important question is how its theoretical concepts get translated into a new policy framework. This raises the question of political economy, which I largely shy away from. However, I will offer my eccentric political views on the future of MMT.

The Price Level Does Not Exist

It appears to be a mistake to refer to the price level when discussing the theoretical properties of an economy; at best, there are a few price levels in play at a given time. If we are referring to the measured level of a price index, such as the Consumer Price Index (CPI) there is no difficulty, however this aggregate price index should not be expected to correspond to any useful theoretical construct. This article explains my logic, and then looks at the practical implications of what appears to be yet another hand-wringing post-Keynesian article about the difficulties with mathematical economics.

Update: Based on some reader feedback, I realise that I need to fill out parts of my logic in more detail. To repeat what I wrote below, I am unsure how my thinking fits in with the existing academic literature in this area. I am looking at this from the point of view of building a model that fits observed data, and there's some purist theoretical issues about price indices that I am not concerned about. Merijn Knibbe left this reference, which overlaps some of my thinking. The more detailed version will probably have to follow this weekend, since Professor Wren-Lewis caused yet another internet discussion that I want to weigh in on...

The State Of MMT Theory Is Good

I have returned from the first Modern Monetary Theory Conference, and I am feeling complacent about the state of theory within Modern Monetary Theory (MMT). I am looking at this from a particular perspective, which I will explain in this article. Other aspects of Modern Monetary Theory are obviously a work in progress, which I hope to discuss in a later article.

Conference Presentation

This is the link to the streams for the presentations at the Modern Monetary Theory conference: https://www.umkc.edu/ia/streaming/live-streams.cfm My presentation was in the stock-flow consistent models panel, which is the second on the list (Friday AM). (I did not watch the presentation myself; my browser had problems with loading it, and I did not have time to see why.) The conference was very interesting, and it was nice to meet up with people with whom I had been in contact online. I was all looking forward to writing up my impressions of the conference, but I contracted a cold that hit when I was flying back. As a result, nothing much got done today.

I should write something up soon, but as a spoiler, I think the outlook for MMT is good. The new textbook (April 2018 was the projected publication date) will greatly help to build up MMT's credibility amongst those (like myself) who lack access to a research library and journal publications.

Presenting Friday At MMT Conference

I will be presenting at the First International Conference of Modern Monetary Theory on Friday at 8:30 am. (The schedule posted on the website at the time of writing is incorrect, and it has me scheduled for Thursday.)  I believe that the presentations will be broadcast via the internet (not sure about the details).

I will be giving an introduction to the Python sfc_models framework, explaining its basic concepts. Since I assume that most of the audience are not heavily into programming, it will be fairly non-technical (I hope).

I am not planning on bringing my computer, but if you will be there and have a computer, I could offer tutorials.

DSGE Wars (Again)

There's been a small revival in the arguments around Dynamic Stochastic General Equilibrium (DSGE) models. My thinking on these models has evolved somewhat; I think they are not particularly interesting, but the arguments over there use are somewhat misplaced.

(I am getting ready to head out to the Modern Monetary Theory conference in Kansas City, so my comments here are brief.)

Python Book Nearly Done

Just a quick update. Although I wanted to revert to two articles a week, I got tied up with projects, and I may stick with one article a week for a bit longer. I am getting ready to present at the MMT conference, and I am trying to finish off the guide to the sfc_models stock-flow consistent models package.

 I have released version 1.0 of sfc_models; it is similar to the previous development versions, but is a major jump versus the last production version. The idea is that the guide is calibrated against version 1.0 of the module, and users could download that version if they want the code examples within the book to be guaranteed to work.