The trade-off between inflation and unemployment in an ‘MMT world’: an open-economy perspective

Carnevali, Emilio and Deleidi, Matteo (2023) The trade-off between inflation and unemployment in an ‘MMT world’: an open-economy perspective. European Journal of Economics and Economic Policies: Intervention, 20 (1). pp. 90-124. ISSN 2052-7764

Preview	Text 2052-7772-article-p90.pdf - Published Version Available under License Creative Commons Attribution 4.0. Download (345kB) | Preview
Preview	Text InflationJG_Intervention_MainText_CarnevaliDeleidi.pdf - Accepted Version Download (541kB) | Preview

Abstract

This paper is focused on modern monetary theory’s (MMT) treatment of inflation from an open-economy perspective. It analyses how the inflation process is explained within the MMT framework and provides empirical evidence in support of this vision. However, it also makes use of a stock–flow consistent open-economy model to underline some limits of the theory when it is applied in the context of a non-US (relatively) open economy with a flexible exchange-rate regime. The model challenges the contention made by MMT-ers that measures such as the job guarantee programme can achieve full employment without facing an inflation–unemployment trade-off.

Actions (login required)

View Item

Downloads