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#MMT has received a ton of attention on #econtwitter and beyond over the past few months, but my impression is that exchanges b/w MMT-folks are often not v productive. Following thread covers 4 "meta observations" trying to pinpoint issues and suggest more productive ways. 1/n
Summary: 1) terminological differences, 2) unstated premises, 3) attitudes/missing respectful treatment, and 4) a lack of mathematical models in the debate represent important limitations => formalization of debate seems crucial. 2/n
Prelim.: i) Premise: both sides of debate bring sth useful to the table, but present mode of discourse not conducive to synthesis. ii) Some notable exceptions, eg @dandolfa & @rohangrey exchange yesterday was excellent. iii) read "mainstream" in inverted commas throughout. 3/n
@dandolfa @rohangrey 1) Terminological differences: key concepts are used in different ways => confounding of semantic vs substantive differences. 4/n
@dandolfa @rohangrey Ex a) Money supply: MMT typically includes government bonds in the definition, mainstream doesn't. 5/n
@dandolfa @rohangrey Ex b) Deficit spending: mainstream typically includes "bond sale" as part of "deficit spending, MMT doesn't. 6/n
@dandolfa @rohangrey 2) Unstated premises: one big limitation esp of Twitter is that given brevity, key assumptions remain unstated. Different environments as per specification of background assumptions often imply substantively different conclusions. (@rodrikdani often highlights this cogently.) 7/n
@dandolfa @rohangrey @rodrikdani Ex a) Are there excess reserves in the system or not -- crucially affects whether increasing reserves in system affects interbank rate or not? (@GeorgeSelgin has a lot to say about this.) 8/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin Ex b) Focus is typically on fiscal policy, but what are we assuming about CB (!): does it follow policy as per status quo ex ante or also modified as per MMT prescriptions? (imho underpinned lots of @jasonfurman vs. @StephanieKelton disagreement.) 9/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton Ex c) Are TGA balances positive or negative ex ante -- affects sequence of fiscal and monetary operations, which as per issue 1) are additionally often interpreted using different terminology by mainstream vs. MMT. 10/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton 3) Attitudes: MMT typically associated with a call for more expansionary fiscal policy. In debates, mainstream economists like @paulkrugman or @sjwrenlewis are presented as being deficit hawks (relative to MMT) even thought they've fought hard for greater stimulus eg in GFC. 11/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton @paulkrugman @sjwrenlewis Related: (in my view) a lot of MMT-policy implications are also argued for by mainstream economists but are presented as radically novel by MMT. Especially if non-economist MMT-followers online make this claim, mainstream economists may feel they're not given due credit. 12/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton @paulkrugman @sjwrenlewis 4) Lack of mathematical models: ultimately, at the risk of being called out on being ivory-tower-mathiness-adherent, I believe the debate is suffering from a lack of mathematical formalization. 13/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton @paulkrugman @sjwrenlewis At present, words are easily misinterpreted (cf 1)), assumptions aren't spelled out (cf 2)) and interpersonal acrimony substituted for rigor (cf. 3) ). 14/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton @paulkrugman @sjwrenlewis I would love for i) MMT folks to get together to present an alternative consensus formalization competing with mainstream models, and then ii) mainstream folks to evaluate it fairly. 15/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton @paulkrugman @sjwrenlewis I've critically discussed the use of mathematics in economics before, but always emphasized that mathematics is supremely useful in helping economists "clarifying and expressing their thoughts succinctly. Furthermore, it prevents unwarranted jumps in reasoning." 16/n
@dandolfa @rohangrey @rodrikdani @GeorgeSelgin @jasonfurman @StephanieKelton @paulkrugman @sjwrenlewis I believe this is precisely what the debate needs right now. 17/17
