Title: Teaching modern monetary theory: a classroom exercise

Authors: Will Fisher

Addresses: Department of Economics, Cal Poly Humboldt, 1 Harpst St., Arcata, CA 95521, USA

Abstract: Since the Great Financial Crisis of 2008, modern monetary theory (MMT) has gained significant notoriety in the popular press as well as having stimulated academic discourse. Students are becoming increasingly inquisitive about the large fiscal stimulus following the 2008 crisis and during the COVID-19 pandemic and want to know where this money came from. MMT provides important insights into how federal spending, the Federal Reserve, and the banking sector actually operate. MMT can be confusing to students as it contravenes the dominant narrative surrounding money creation, budget deficits, and the national debt. This classroom exercise allows students an opportunity to learn about key characteristics of MMT by having them participate in a simulated classroom economy. The exercise is very useful in an intermediate macroeconomics, or money and banking class.

Keywords: modern monetary theory; MMT; chartalism; classroom exercise; sectoral balances; pedagogy; economics education.

DOI: 10.1504/IJPEE.2022.131144

International Journal of Pluralism and Economics Education, 2022 Vol.13 No.4, pp.393 - 400

Received: 25 Oct 2022
Accepted: 02 Feb 2023
Published online: 31 May 2023 *

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