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A framework for the analysis of the price level and inflation

In: Modern Monetary Theory

Author

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  • Warren Mosler

Abstract

What has been popularized as MMT (Modern Monetary Theory) began in 1992 as a description of Federal Reserve Bank monetary operations. I self-published 'Soft Currency Economics' in 1994 and in January of 1996 I introduced my analysis to the academic community through an internet discussion group. And while subsequent research revealed earlier writings of authors who had similar understandings, MMT remains sufficiently unique to be categorized as its own school of economic thought. This chapter begins with an analysis of both the source of the price level and what makes it change (casually known as inflation) which is currently unknown to Central Bankers. It also analyses the effects of interest rate policy on the price level, which contradicts that of Central Bankers. The presentation is from a US perspective and applicable to other state currencies with floating exchange rate policies and similar institutional structure.

Suggested Citation

  • Warren Mosler, 2023. "A framework for the analysis of the price level and inflation," Chapters, in: L. R. Wray & Phil Armstrong & Sara Holland & Claire Jackson-Prior & Prue Plumridge & Neil Wilson (ed.), Modern Monetary Theory, chapter 4, pages 87-93, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:21315_4
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    Keywords

    Economics and Finance;

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