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Modern Monetary Theory: A Wrong Compass for Decision-Making

Author

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  • Françoise Drumetz

    (Banque de France)

  • Christian Pfister

    (Banque de France)

Abstract

In the last few years, the so-called Modern Monetary Theory (MMT) has been gaining prominence in the media and the public. This article presents the MMT approach to money and monetary policy, and discusses its recommendations regarding fiscal policy and aggregate demand management, the structural policies it advocates as well as the international aspects of MMT. Overall, it appears that MMT is based on an outdated state of economic science and that its claims regarding economic policies are much exaggerated: The meaning of MMT is more that of a political manifesto than of a genuine economic theory.

Suggested Citation

  • Françoise Drumetz & Christian Pfister, 2021. "Modern Monetary Theory: A Wrong Compass for Decision-Making," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 56(6), pages 355-361, November.
    • Handle: RePEc:spr:intere:v:56:y:2021:i:6:d:10.1007_s10272-021-1014-5
    DOI: 10.1007/s10272-021-1014-5
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    References listed on IDEAS

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    Cited by:

    1. Vladimir Mihajlović, 2023. "Macroeconomic Policy Response To Pandemic: A Paradigm Shift In Sight?," Shaping Post-COVID World – Challenges for Economic Theory and Policy, in: Aleksandra Praščević & Miomir Jakšić & Mihail Arandarenko & Dejan Trifunović & Milutin Ješić (ed.),Shaping Post-COVID World – Challenges for Economic Theory and Policy, chapter 5, pages 89-105, Faculty of Economics and Business, University of Belgrade.
    2. repec:beo:swcetp:23-05 is not listed on IDEAS

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