© 2019

What's Wrong with Modern Money Theory?

A Policy Critique


About this book


This Palgrave Pivot assesses the validity of Modern Money Theory’s approach to macroeconomic policy, specifically monetary and fiscal policy. Whereas other papers have focused primarily on theoretical and doctrinal issues, this book focuses primarily on an analysis of MMT’s policy approach. Though drawing on academic literature, this book’s approach is empirical and policy-based, making it accessible to scholars and the public alike. It addresses a burning question in the policy and politics of the US and elsewhere where MMT is gaining a policy foothold, especially among progressive activists and politicians: Is MMT, in fact, a good guide for progressive macroeconomic policy? The main focus of this book is to explain why the answer to this question is no.


modern money theory modern monetary theory MMT randall wray us budget budget policy fiscal policy deficit spending chartalism Stephanie Kelton us monetary policy

Authors and affiliations

  1. 1.University of MassachusettsAmherstUSA

About the authors

Gerald A. Epstein is Professor of Economics and a founding Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst, USA. Epstein has written articles on numerous topics including financial crisis and regulation, alternative approaches to central banking for employment generation and poverty reduction, capital account regulations and the political economy of central banking and financial institutions. Epstein has worked with numerous UN agencies including the ILO, UNDESA, UNDP, and UNCTAD on the topics of macroeconomics and monetary policy in developing countries. His most recent edited volumes are: The Handbook of The Political Economy of Financial Crises, (co-edited with Martin Wolfson) and The Political Economy of International Finance in an Age of Inequality: Soft Currencies, Hard Landings. In recent years he has been the recipient of two INET grants, one to study the “social efficiency” of the financial system and a second to look at the distributional impacts of quantitative easing. He has also won the Samuel F. Conti Faculty Fellowship Award from the University of Massachusetts, Amherst.

Bibliographic information


“Professor Gerald Epstein is a leading thinker in the political economy of monetary policy and central banking. His approach emphasizes the significance of interests and institutional arrangements. This book provides a critique of modern money theory (MMT) and its claim that sovereign governments are financially unconstrained. It shows how institutional arrangements differentially constrain governments, giving rise to a financial standing hierarchy that MMT overlooks and neglects. The book makes an important novel contribution, adding to existing macroeconomic critiques of MMT.” (Thomas Palley, Co-editor, Review of Keynesian Economics)

“Epstein’s book on MMT is an important contribution to the debate on monetary theory and policy. It considers a wide range of problems of this theory and raises pertinent concerns about the applicability of its policy. Based on an extensive knowledge of the literature and of contemporary monetary history, the book underscores the failure of MMT to describe the complex working of the financial system. Readers can enormously benefit from this book.” (Carlo Panico, Professor of Economics, Universidad Nacional Autonomous de Mexico (UNAM))

“Jerry Epstein takes no prisoners in his essential guide to Modern Monetary Theory. His examination of the international dimensions of the approach and its implications for non-key currency countries raise vital issues that often receive little attention by both proponents and critics.” (Ilene Grabel, Distinguished University Professor, University of Denver)