Modern Monetary Theory: A Primer

Written By: Sri Thanabalasingam

It’s been ten years since the global financial crisis, but its effects are still seen throughout the world. Most major economies are grappling with a low growth, low inflation environment (Chart 1). Productivity has also remained stubbornly low, even negative for some economies. To combat these forces, central banks have dug deeper into their toolkits for unconventional policies to provide a boost to lackluster demand.1 However, these policies have produced only limited success.

With subdued demand and muted inflationary pressures, even more unorthodox ideas have come to the fore. The most buzzworthy one is Modern Monetary Theory (MMT).

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