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Modern Monetary Theory or Islamic Monetary Theory of Value? Evidence from Malaysia النظرية النقدية الحديثة أم نظرية النقد الإسلامي للقيمة؟ أدلة من ماليزيا

Author

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  • Adam Abdullah

    (Associate Professor, College of Economics and Management, Al-Qasimia University, Sharjah, UAE)

Abstract

The purpose of this study is to contrast two recent monetary reform proposals involving the neo-chartalist Modern Monetary Theory (MMT) and the metallist Islamic Monetary Theory of Value (IMTV). Money is the common denominator for all economic transactions and yet, under the fiat standard, we have witnessed an exponential increase in prices and 425 instances of monetary, debt, and financial crises. Therefore, genuine monetary reform must protect the store of value function of money over the long term to protect wealth from confiscation by inflation thereby ensuring monetary and economic stability. This study adopts an MMT sectoral balance analysis of Malaysian macroeconomic data, as well as an IMTV analysis of Malaysian macroeconomic and gold price data to evaluate the effect on nominal and real prices. It finds that MMT provides no new insights about monetary theory, while making unsubstantiated claims about macroeconomic policy that would merely extend the highly inflationary monetary policies experienced under a centralized debt-based monetary system. Conversely, this study empirically establishes that a de-centralized monetary system based on the IMTV and the intrinsic value of pure gold (or silver), maintains its purchasing power and ensures that real prices are low and stable over the long term. الغرض من هذه الدراسة هو مقارنة اثنين من مقترحات الإصلاح النقدي الأخيرة التي تنطوي على النظرية النقدية الحديثة (MMT) ونظرية النقد الإسلامي للقيمة (IMTV). إن النقود هي القاسم المشترك لجميع المعاملات الاقتصادية، ومع ذلك فقد شهدنا، وفقًا للمعايير الورقية، زيادة هائلة في الأسعار و 425 حالة من الأزمات النقدية والدَّينية والمالية. لذلك، يجب أن يحمي الإصلاح النقدي الحقيقي وظيفة النقود كمخزن للقيمة على المدى الطويل لحماية الثروة من التآكل والنقص عن طريق التضخم وبالتالي ضمان الاستقرار النقدي والاقتصادي. تعتمد هذه الدراسة على تطبيق النظرية النقدية الحديثة MMT في تحليل الموازنة القطاعية لبيانات الاقتصاد الكلي الماليزي، بالإضافة إلى استخدام نظرية النقد الإسلامي للقيمة IMTV في تحليل بيانات الاقتصاد الكلي الماليزي وأسعار الذهب لتقييم التأثير على الأسعار الاسمية والحقيقية العامة. استنتجت الدراسة أن النظرية النقدية الحديثة MMT لا تقدم رؤى جديدة حول النظرية النقدية، في حين تقدم ادعاءات لا أساس لها حول سياسة الاقتصاد الكلي التي من شأنها أن توسع فقط السياسات النقدية التضخمية العالية التي تمر بها في ظل نظام نقدي مركزي قائم على الدين. على العكس من ذلك، تثبت هذه الدراسة تجريبيا أن النظام النقدي غير المركزي والمستند على نظرية النقد الإسلامي للقيمة IMTV والقيمة الجوهرية للذهب الخالص (أو الفضة)، تحافظ على قوتها الشرائية وتضمن انخفاض الأسعار الحقيقية واستقرارها على المدى الطويل.

Suggested Citation

  • Adam Abdullah, 2020. "Modern Monetary Theory or Islamic Monetary Theory of Value? Evidence from Malaysia النظرية النقدية الحديثة أم نظرية النقد الإسلامي للقيمة؟ أدلة من ماليزيا," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 33(2), pages 25-46, July.
    • Handle: RePEc:abd:kauiea:v:33:y:2020:i:2:no:2:p:25-46
    DOI: 10.4197/Islec.33-2.2
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    References listed on IDEAS

    as
    1. L. Randall Wray, 2024. "Modern Money Theory," Springer Books, Springer, edition 3, number 978-3-031-47884-0, March.
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    7. Wynne Godley, 1996. "Money, Finance and National Income Determination: An Integrated Approach," Economics Working Paper Archive wp_167, Levy Economics Institute.
    8. Bernard Lietaer, 2017. "A Possibly Sharīʿah-Compatible Global Currency to Stabilize the Monetary System عملة عالمية متوافقة مع الشريعة الإسلامية لتحقيق استقرار النظام النقدي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 30(2), pages 47-58, July.
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    Cited by:

    1. Adam Abdullah, 2022. "Classical Islamic Perspectives on Monetary Theory وجهات نظر عُلماء المُسلمين القُدامى حول النظرية النقدية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 35(1), pages 3-22, January.

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    More about this item

    Keywords

    Modern monetary theory; Islamic monetary theory; Islamic economics. النظرية النقدية الحديثة، نظرية النقد الإسلامي، الاقتصاد الإسلامي.;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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