Modern Money Theory: rise in the international scenario and recent debate in Brazil

Abstract

This paper has a twofold purpose. The first one is to present the core ideas of MMT. The second one is to explain its recent rise in Brazil after the publication of Andre Lara Resende’s articles in the press in 2019 and a book in 2020. In order to do that, the paper is organized as follows. After the introduction, the first session presents the core ideas of MMT: i) chartal money, or tax driven money; ii) functional finance; iii) Minskyan financial fragility; iv) sectoral balances approach; v) employer of last resort. The second session presents some critiques MMT has received both from the orthodox and the heterodox sides at the international level. The third section discusses the particular way in which MMT’s ideas have recently arrived in Brazil, considering peculiarities of the Brazilian economic debate and political scenario. The final session brings back the main ideas presented in the paper and raises critics to Lara Resende’s contributions from a political economy perspective.

JEL Classification: E12; E60; E66.