tag:blogger.com,1999:blog-5908830827135060852.post8637655809213722346..comments2024-03-29T02:54:56.523-04:00Comments on Bond Economics: MMT And Policy VariablesBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5908830827135060852.post-60545207187010133362020-02-03T04:44:16.086-05:002020-02-03T04:44:16.086-05:00This comment has been removed by a blog administrator.KGRNAccountinghttps://www.blogger.com/profile/01660676627045061279noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-35108831387424824842020-01-20T07:33:27.056-05:002020-01-20T07:33:27.056-05:00(Ideas still coming...)
Typical government budgeti...(Ideas still coming...)<br />Typical government budgeting puts everything under nominal dollar envelopes. This creates a hybrid system, where the quantity demanded is a function of price. This helps deal with the theoretical issue of instantaneous jumps in the spot price level that pop up in economic theory (but not so much in the real world).Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-46693396692434331942020-01-20T07:18:52.127-05:002020-01-20T07:18:52.127-05:00Another area is indexation. Indexation is obviousl...Another area is indexation. Indexation is obviously a concern when looking at inflation control, and it does affect prices and wages paid by the government. Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-20896115127192256752020-01-20T07:06:32.758-05:002020-01-20T07:06:32.758-05:00The JG is the best example, and I will be discussi...The JG is the best example, and I will be discussing it next (last of the planned sequence of articles). <br /><br />As for other examples, the most important would be wages of regular employees. Although this is normally thought of as price taking, wages are administered (typically with union negotiations). Another area is that of transfer payments (admittedly not a requisition price, but can be thought of as having a similar effect). <br /><br />Requisition of goods/services from the business sector is typically via auction, and by definition is price taking. The obvious point was that this behaviour is not a law of nature, and could be viewed as a policy error.<br /><br />One can say that governments do not think this way. The response is that is one major reason why inflation took hold in the 1960-1970s. I will immediately note that is my initial thinking on the topic, and I do not recall anyone arguing that point specifically.<br /><br />The MMT argument is that budgeting is to be done with an eye on inflation. Even if the government is not attempting to dictate prices (which is going to be hard to do in many cases), the budgeting should take price changes into account.<br /><br />In the current environment of “low-flation”, observed CPI is going to mainly follow sectoral effects in the private sector. These wiggles are not going to be related to what the government is doing. However, if we look at the US, the biggest engines of inflation in the past couple of decades has been higher education and medical care, which are almost entirely due to government policy. Rent is another area of inflation, and is also related to policy at differing levels of government.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-52772537912034814542020-01-19T19:40:17.833-05:002020-01-19T19:40:17.833-05:00“The emphasis on the price of government requisiti...“The emphasis on the price of government requisitions (particularly the Job Guarantee), and the de-emphasis of monetary policy are the key divides between MMT and the consensus conventional position.”<br /><br />When you say “particularly”, I can see how the JG lends itself naturally to a characterization of price setting. But what other practical examples of government spending would be similar to this?<br /><br />Presumably a government with the JG still spends money on various things other than wages paid for services rendered in the JG. How does price setting apply outside of the scope of the JG?<br /><br />Wouldn’t the full spending menu even in the case of a JG involve a mix of price setting and price taking?<br /><br />And if so, don’t the proportions of each matter in the full characterization?<br /><br />Not sure if these questions make sense – just thinking about it now.Anonymousnoreply@blogger.com