MODERN MONETARY THEORY AS AN ALTERNATIVE TO THE MAINSTREAM PARADIGM
This article is an abstract of chapter 20 of the well-known textbook on macroeconomics by William Mitchell, Randall Ray and Martin Watts (Macroeconomics, William Mitchell, L. Randall Ray and Martin Watts, 1st edition, 2019), where is analyzed in the sovereign floating-currency's economy a new opportunity to reconcile the roles of the central bank and the treasury that differs from the conventional paradigm. It is emphasized that, despite the universality of accounting principles, its application to households and firms as users of the currency is fundamentally different from its application by the central bank, which is the issuer of the currency.
The article is devoted to operational practice. For many years, there has been a gap between the mainstream approach to implementing fiscal policy and institutional arrangements in countries such as the US, UK, and Australia, which, while following similar principles, differ in the way they implement fiscal policy.
The article explains why the self-restraint that the political system imposes on central banks that buy Treasuries directly from the primary market does not have a significant impact on the results of operations.
Key words: modern monetary theory, fiscal policy, monetary theory, monetary sovereignty of the state, public debt, inflation, inflation targeting.