Modern Monitory Theory

Created: 2022-12-27
Status: #soil
Last Edited: 2022-12-27
Topic: economics

What is Modern Monitory Theory?

Modern Monitory Theory (MMT) is an economic theory developed in the late 20th century that focuses on the roles of governments, central banks, and other financial institutions in managing the money supply and macroeconomic performance.

MMT centers around the idea that government spending should be used to promote economic growth and stability. It also suggests that government debt should be managed responsibly to ensure that it does not become too large relative to GDP.

MMT also considers the role of taxes in regulating inflation and suggests that tax increases should be used to reduce inflation when necessary.

Finally, MMT proposes a framework for understanding how monetary policy affects interest rates, exchange rates, and other economic variables.