In “What are Taxes For?”, Paul Krugman chooses to mention Modern Monetary Theory (MMT) again, though only in passing on this occasion. Krugman’s post follows recent consideration of MMT by Brad DeLong, Nick Rowe and Steve Randy Waldman. Much of the disagreement expressed by these economists appears to stem from different conceptualizations of monetary operations, but implicit assumptions over long-run employment determination and the nature of interest also seem to contribute to the differences in perspective. In this post, I want to explore these points a little, using Krugman’s brief remarks as a springboard for the discussion.

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