International Political Economics: Monetary and Fiscal Policy in an Open Economy from a MMT perspective - Einzelansicht

Course description

This course offers an introduction into monetary and fiscal policy in an open economy. The lecture focuses on scholarly research in Modern Monetary Theory (MMT) and real world Macroeconomics. It will examine theoretical and empirical research findings and recognize the importance of the monetary system in a capitalist economy.

Modern Monetary Theory (MMT) is distinguished from other approaches to macroeconomics because it places the monetary arrangements at the center of the analysis. MMT builds on the insights of many economists who have worked in the heterodox tradition. It therefore rejects the main precepts of the orthodox neoclassical approach to macroeconomics. However, because it places an emphasis on monetary arrangements within the capitalist economy, it adds new insights that were not previously available within the heterodox tradition.

Learning macroeconomics from an MMT perspective requires you to understand how money 'works' in the modern economy and to develop a conceptual structure for analyzing the economy as it actually exists. By placing government, as the currency issuer, at the center of the monetary system, the MMT approach immediately focuses on how a government spends, and how that spending influences those aforementioned macroeconomic aggregates that should be explained.

The aim of the lecture is to inform students on theoretical concepts and contemporary policy debates from a pluralist perspective. In this regard students will

• understand the different definition of economics within the orthodox and heterodox view;
• recognize that macroeconomics is a contested discipline with two broad schools of thought that differ in terms of their perspectives on the effectiveness of markets and the role of government;
• gain a thorough understanding of MMT and Macroeconomics, as well as recent ideas, controversies and policy debates on monetary and fiscal policy in an open economy.

The course will aim at understanding the relationship between government and the economy and how monetary and fiscal policy has evolved over the last decades. We will also consider critical voices of MMT as well as basic constraints of its policy conclusions in an international political economy context.

Main literature

• Mitchell, William / Wray, Randall L. / Watts Martin (2019): Macroeconomics, Macmillan International, London
• Kelton, Stephanie (2020): The Deficit Myth, John Murray, London

 Further literature will be announced on Moodle

Moodle Page: https://moodle2.uni-potsdam.de/course/view.php?id=25262

Moodle ID: MMT2021?

Requirements and grading

• Final Exam 
• Written assignments

PART I: INTRODUCTION

• Introduction
• How to Think and Do Economics
• The Use of Framing and Language in Macroeconomics

PART II: CURRENCY, MONEY AND BANKING

• Introduction to Sovereign Currency: The Government and its Money
• Money and Banking

PART III: UNEMPLOYMENT AND INFLATION: THEORY AND POLICY

• Unemployment and Inflation
• The Phillips Curve and Beyond

PART IV: ECONOMIC POLICY IN AN OPEN ECONOMY

• Introduction into Monetary and Fiscal Policy Operations
• Fiscal Policy in Sovereign Nations
• Fiscal Space and Fiscal Sustainability
• Monetary Policy in Sovereign Nations
• Policy in an Open Economy: Exchange Rates, Balance of Payments and Competitiveness

PART V: Contemporary Debates

• Recent Policy Debates
• Conclusion and Prospects