My brief summary is that MMT pretty much coincides with traditional Keynesian views in the context of a liquidity trap, but that I reject the claim commonly made in popular presentations of MMT, that increased government spending doesn’t imply increased taxation.
SOURCE: Market Monetarism: A First Look
It is unfortunate and disappointing that this is the clearest exposition by Professor Quiggin and his thoughts on MMT after previous discussions on MMT by his own admission was a “misreading of MMT” by others and confining the topic to the sandpits after having had his say on the subject.
Quiggin and MMT’s dispute over increased government spending seems to be an intertemporal one. The disagreement seems to be more about WHEN the increased taxation occurs. NOR IS IT CLEAR what is meant by “increased taxation”. Is it an increase in tax rates? Is it an increase in tax collected as done by the existing effective tax rates? If the latter there is no disagreement, that is just the function of automatic stabilisers.
MMT rejects the liquidity trap (and IS-LM) & consequently rejects that MMT only applies in a liquidity trap. DeLong seems willing to see if MMT applies beyond the Zero Lower Bound (ZLB) but only as a look towards the future.
As previously noted in this blog – The real point of departure for MMTers and traditional Keynesians appears to be bound up in the loanable funds theory of the interest rate (the former rejecting and the latter accepting it). From that follow all sorts of differences re: fiscal sustainability. Thankfully Philip Pilkington has a reasonably clear take-down of it and acknowledges the reason it persists is that it works in theory, if not practice. And MMT economist Scott Fullwiler explains fiscal sustainability from an MMT perspective.