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Modern Monetary Theory and Fiscal–Monetary Policy Frameworks

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  • William Lear

    (Belmont Abbey College)

Abstract

The U.S. federal government fiscal–monetary policy framework is the organizational and operational structure that ties the state’s budgeting to the means of payment. There have been eras of government activism and eras of restraint. Policy frameworks either facilitate action or restrain action. The modern era has seen frequent use of fiscal and monetary tools to combat cycle downturns and financial crises, but orthodox thinking concerning government action and framework design hinder effective policy. An additional impediment to public spending arises from finance capital political pressure. This paper advocates for a new fiscal–monetary framework in the U.S. The paper examines the policy framework suggested by modern monetary theory (MMT) and makes the case for reform in the U.S. government’s fiscal–monetary framework to fully operationalize MMT’s framework.

Suggested Citation

  • William Lear, 2025. "Modern Monetary Theory and Fiscal–Monetary Policy Frameworks," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 51(3), pages 436-455, June.
    • Handle: RePEc:pal:easeco:v:51:y:2025:i:3:d:10.1057_s41302-025-00300-0
    DOI: 10.1057/s41302-025-00300-0
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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