This post lists several important academic papers introducing Modern Money Theory (MMT) and its core concepts, each written in particularly accessible language – and reasonably short. At the bottom of this post you will find additional lists containing:
- Academic works curated for mainstream economists.
- Important academic papers for the more ambitious.
When you’re ready for more, there are hundreds more papers by MMT developers to be found in the various scholarship repositories. And of course, there’s always the official 2019 MMT-lens introductory textbook called Macroeconomics.
GO BACK TO ALL MMT RESOURCES
This post was last updated September 5, 2020.
Disclaimer: I am a layperson who has studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for the MMT project. The information in this post is my best understanding but I don’t assert it to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.
Warren Mosler and Mat Forstater’s The Natural Rate of Interest Is Zero (2005, 8 pages)
I read this for the first time in mid 2020, and wish I did so long ago. It’s written in a particularly accessible language, provides a good introduction to MMT, and also gives a first hint to how something as seemingly-innocuous as central bank interest rate targets causes mass suffering and exacerbates inequality.
Stephanie Kelton’s Hierarchy of Money (1998, 11 pages)
A pillar upon which MMT is built: chartalism, or the state theory of money. This paper discusses the difference between the “metallist” (barter) and “chartalist” stories.
Abba Lerner’s Functional Finance and the Federal Debt (1943, 15 pages)
Another pillar. Lerner’s core recommendation is that federal spending and taxation should be continuously altered in order to always achieve full employment and avoid inflation, no matter the budget position (federal deficit, balanced budget, or surplus) it results in. MMT agrees with Lerner’s philosophy, but recommends a different solution to achieve it: the (MMT-designed!) job guarantee (JG).
The job guarantee achieves this balance in an automated fashion: by the people themselves choosing to enter or leave the JG program. And it’s also countercyclical, in that when people are laid off in bad times, many people choose to accept a JG job. When the private sector is booming, then private businesses will (are encouraged to!) entice people out of the JG with better wage-benefits.
In other words, the MMT-JG is an automatic, countercyclical stabilizer.
Pavlina Tcherneva’s Unemployment: The Silent Epidemic (2017, 27 pages)
This paper describes the absolute scourge of involuntary unemployment, both on individuals and society as a whole. How, without exaggeration, it behaves like a communicable disease – a plague would not be that outlandish a term. Unemployment is absolutely devastating to both individuals and society.
This paper, to me, shows what we are truly fighting for. Two excerpts:
L. Randall Wray’s Government As Employer of Last Resort: Full Employment without Inflation (1997, 18 pages)
An excellent introduction to the MMT-designed job guarantee, including a useful section on several common examples of skepticism with elegant responses.
Warren Mosler’s MMT White Paper (2020, 5 pages)
A concise walkthrough through the entire MMT project, by its founder. From Warren: “The purpose of this white paper is to publicly present the fundamentals of MMT.”
Mat Forstater’s 1999 Public Employment and Economic Flexibility: The Job Opportunity Approach to Full Employment
Describes the many reasons why it is both impossible and undesirable for for-profit business to attain (except by blind luck) or maintain full employment. Conversely, it describes why only fully-sovereign currency issuing governments can attain and maintain full employment – in both good times and bad. This paper particularly illuminates some of the critical differences between the currency issuer and currency users.
Papers to learn MMT, written for a mainstream audience.
Here are some additional papers not included in that list that I would also recommend to mainstream economists:
- Wray, L. R. (2019). Statement of Senior Scholar L. Randall Wray to the House Budget Committee, US House of Representatives: Reexamining the Economic Costs of Debt: Provides a detailed (and data-backed) look at the MMT view of the federal deficit.
More ambitious core works for the more ambitious (will add to this list…please recommend!)
With thanks to many.
- Pavlina Tcherneva’s “Tcherneva’s Monopoly Money: The State as a Price Setter” (2002)
Finally, Stephanie Kelton’s 1998 paper, “Can Taxes and Bond Sales Finance Government Spending?.” As stated in her book, The Deficit Myth, this 1998 paper is a draft. There is another 2000 version that was peer reviewed and submitted to a journal. It is different in style and organization, but is otherwise the same. (I like both.)
Here’s the entire abstract from the 1998 version: