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How to discuss MMT without discussing it – BIS style

On October 13, 2019, the Bank of International Settlements published a paper – Exiting low inflation traps by “consensus”: nominal wages and price stability – (which was based on a speech one of the authors was to make in late November at a conference in Colombia). The reason I cite this paper is because it talks about Modern Monetary Theory (MMT) – in pejorative terms, without really knowing what MMT is. But the most interesting aspect of it was the admission that the mainstream theory that they use to set up the ‘straw person’ they tear down cannot explain real world events. The BIS unwittingly admits that the mainstream macroeconomics really is adrift and the analytical frameworks that arise from it (DSGE etc) are incapable of explaining real world developments. So I thought that was worth documenting.

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