Harvested from Twitter. Because I needed it spelled out.
“It’s weird how people sometimes talk about MMT’s prescriptive side as if it’s not customary for a macro framework to have both descriptive and prescriptive elements. 1/x
Milton Friedman gave us the expectations-augmented Phillips Curve (descriptive, in his mind) as well as a (prescriptive policy) monetary growth rule. 2/x
New Classical economists gave us models rooted in rational expectations and then insisted on the importance of announced (vs. unannounced) changed in the money supply. 3/x
Real Business Cycle models emphasize technological shocks as drivers of macro fluctuations but advocate laissez faire, which *is itself a policy prescription*! 4/x
The point is, one’s understanding of the behavior of the macro system naturally invites a policy stance to complement the analysis and optimize performance. 5/5”