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

Emilio Carnevali; Matteo Deleidi

doi:10.4337/ejeep.2022.0080

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

Emilio Carnevali, Matteo Deleidi

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

89 Downloads (Pure)

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.

Original language	English
Pages (from-to)	90–124
Number of pages	35
Journal	European Journal of Economics and Economic Policies: Intervention
Volume	20
Issue number	1
Early online date	1 Apr 2022
DOIs	https://doi.org/10.4337/ejeep.2022.0080
Publication status	Published - 23 May 2023

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

Keywords

Central Banking
Post-Keynesian
Open Economy Model
post-Keynesian
central banking
open-economy model

Access to Document

10.4337/ejeep.2022.0080Licence: CC BY

InflationJG_Intervention_MainText_CarnevaliDeleidiAccepted author manuscript, 528 KB
2052-7772-article-p90Final published version, 337 KBLicence: CC BY

Cite this

@article{29f6606a807f4c639ec2ded071ff8353,

title = "The trade-off between inflation and unemployment in an {\textquoteleft}MMT world{\textquoteright}: an open-economy perspective",

abstract = "This paper is focused on modern monetary theory{\textquoteright}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.",

keywords = "Central Banking, Post-Keynesian, Open Economy Model, post-Keynesian, central banking, open-economy model",

author = "Emilio Carnevali and Matteo Deleidi",

year = "2023",

month = may,

day = "23",

doi = "10.4337/ejeep.2022.0080",

language = "English",

volume = "20",

pages = "90–124",

journal = "European Journal of Economics and Economic Policies: Intervention",

issn = "2052-7764",

publisher = "Edward Elgar",

number = "1",

}

TY - JOUR

T1 - The trade-off between inflation and unemployment in an ‘MMT world’

T2 - an open-economy perspective

AU - Carnevali, Emilio

AU - Deleidi, Matteo

PY - 2023/5/23

Y1 - 2023/5/23

N2 - 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.

AB - 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.

KW - Central Banking

KW - Post-Keynesian

KW - Open Economy Model

KW - post-Keynesian

KW - central banking

KW - open-economy model

UR - https://www.scopus.com/pages/publications/85161718552

U2 - 10.4337/ejeep.2022.0080

DO - 10.4337/ejeep.2022.0080

M3 - Article

SN - 2052-7764

VL - 20

SP - 90

EP - 124

JO - European Journal of Economics and Economic Policies: Intervention

JF - European Journal of Economics and Economic Policies: Intervention

IS - 1

ER -

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

Abstract

UN SDGs

Keywords

Access to Document

Other files and links

Fingerprint

Cite this