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The Applicability Analysis of Modern Monetary Theory System to Government
- 1 Shanghai American School, Shanghai, China
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Abstract
Modern Monetary Theory (MMT) has become a significant alternative to traditional economic thought, challenging conventional views on fiscal and monetary policy, particularly regarding government debt and deficits. MMT challenges traditional economic frameworks by advocating for the government's sovereign currency-issuing power to achieve full employment and stabilize the economy without necessarily triggering inflation. This paper explores the origins and development of MMT, highlighting key contributions by economists such as L. Randall Wray, Stephanie Kelton, and Warren Mosler. The study examines the application of MMT principles in countries like the United States and Japan, analyzing the outcomes of MMT-like policies during periods of economic crisis. Through a comparative analysis of fiscal and monetary policy, the paper argues that MMT offers a viable framework for achieving economic stability and full employment, though it also raises concerns about inflation and long-term fiscal sustainability. The findings also emphasize the importance of strategic policy integration in a globally interconnected economic landscape. Furthermore, this comprehensive analysis aims to contribute to the broader dialogue on how governments can leverage economic theories like MMT to navigate complex financial environments.
Keywords
Modern Monetary Theory, Fiscal Policy, Monetary Policy, Economic Stability
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Cite this article
Luo,G.G. (2024). The Applicability Analysis of Modern Monetary Theory System to Government. Advances in Economics, Management and Political Sciences,142,58-65.
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