scholarly journals Budget deficit to achieve and maintain full-employment under growth by technological progress

2021 ◽  
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Technological Progress ◽  
Budget Deficit ◽  
Full Employment

scholarly journals A Mathematical Model of MMT (Modern Monetary Theory) with Profit Return

2021 ◽  
Vol 11 (4) ◽  
pp. 39
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Technological Progress ◽  
Budget Deficit ◽  
Full Employment ◽  
Returns To Scale ◽  
Perfect Competition ◽  
Budget Deficits ◽  
Price Inflation ◽  
The Difference ◽  
Growing Economy ◽  
The One

Even in perfect competition there is a positive profit return if the good is produced with decreasing returns to scale technology. Using a two-periods overlapping generations (OLG) model with production under perfect competition with decreasing returns to scale technology in which the economy grows by technological progress and the older generation consumers receive the profit returns, we consider the problem of budget deficit under economic growth. We will show the following results. 1) We need a budget deficit to achieve full employment under constant price when the economy grows by technological progress. 2) If the budget deficit exceeds the level necessary to maintain full employment in a growing economy under constant price, inflation will be triggered. We need a stable budget deficit to prevent further inflation. 3) If the budget deficit is insufficient to maintain full employment, it will cause a recession with involuntary unemployment. We can overcome a recession and restore full employment caused by insufficient budget deficit by a budget deficit larger than the one necessary and sufficient to maintain full employment without a recession. We should not offset the deficit created to overcome the recession by subsequent surpluses because we can maintain full employment through constant budget deficits. Also, we show that in each case the budget deficit equals the difference between the net savings of the younger generation consumers and that of the older generation consumers.

scholarly journals An Elementary Mathematical Model for MMT (Modern Monetary Theory)

2021 ◽  
Vol 13 (3) ◽  
pp. 1
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Technological Progress ◽  
Utility Maximization ◽  
Budget Deficit ◽  
Monopolistic Competition ◽  
Full Employment ◽  
Supply And Demand ◽  
Profit Maximization ◽  
Static Model ◽  
Monetary Theory ◽  
Necessary And Sufficient

In recent years, a school of economics called MMT (Modern Monetary Theory) has been attracting attention, but it has not been analyzed theoretically or mathematically. This study aims to provide a theoretical basis for the skeleton of the MMT argument, while maintaining the basics of the neoclassical microeconomic framework, such as utility maximization of consumers by means of utility functions and budget constraint, profit maximization of firms in monopolistic competition, and equilibrium of supply and demand of goods. Using a simple static model that includes economic growth due to technological progress, we will argue that: 1) a continuous budget deficit is necessary to maintain full employment when the economy is growing, and that this deficit does not have to be covered by future surpluses; 2) Inflation is caused when the actual budget deficit exceeds the level necessary and sufficient to maintain full employment. In order to avoid further inflation, it is necessary to maintain a certain level of budget deficit; 3) A shortfall in the budget deficit leads to recession and involuntary unemployment. To recover from this, a budget deficit that exceeds the level necessary to maintain full employment is required. However, since a continuous budget deficit is necessary after full employment is restored, the deficit created to overcome the recession does not need to be covered by future budget surpluses, nor should it be.

scholarly journals Very Simple Mathematical Model of MMT (Modern Monetary Theory)

2021 ◽  
Vol 11 (3) ◽  
pp. 78
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Technological Progress ◽  
Budget Deficit ◽  
Full Employment ◽  
Returns To Scale ◽  
Perfect Competition ◽  
Monetary Theory ◽  
Budget Deficits ◽  
Growing Economy ◽  
The One ◽  
Constant Returns To Scale

The purpose of this paper is to provide a concise theoretical and mathematical foundation for the major parts of the debate in the recently discussed school of economics called Modern Monetary Theory (MMT), while maintaining the basics of the neoclassical microeconomic framework, such as utility maximization of consumers using budget constraints and utility functions, and equilibrium of demand and supply of goods under perfect competition with constant returns to scale technology. By a two-periods overlapping generations (OLG) model in which the economy grows by technological progress, we will show that: 1) We need a budget deficit to achieve full employment with constant price when the economy grows by technological progress. This budget deficit should not be offset by future surplus; 2) A budget deficit that exceeds the level necessary to maintain full employment in a growing economy with constant price will cause inflation. A stable budget deficit is required to prevent further inflation; 3) A budget deficit that is insufficient to maintain full employment will cause a recession with involuntary unemployment. A budget deficit larger than the one necessary and sufficient to maintain full employment without a recession can overcome a recession caused by insufficient budget deficit and restore full employment. The deficit created to overcome the recession should not be offset by subsequent surpluses, since full employment can then be maintained through constant budget deficits.

scholarly journals On Budget Deficit under Economic Growth: Towards a Mathematical Model of MMT

2021 ◽  
Vol 10 (1) ◽  
pp. 36
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Economic Growth ◽  
Mathematical Model ◽  
Population Growth ◽  
Mathematical Analysis ◽  
Technological Progress ◽  
Budget Deficit ◽  
Overlapping Generations ◽  
Full Employment ◽  
Monetary Theory ◽  
Olg Model

Recently, a school of thought called Modern Monetary Theory (MMT) has been attracting attention, but it has not received much theoretical or mathematical analysis. In this paper, we examine the theoretical validity of the MMT argument using an overlapping generations (OLG) model that includes economic growth due to population growth, and give a generally positive evaluation of MMT. The basic idea is that a certain level of continuous budget deficit is necessary to maintain full employment when the economy is growing, that inflation occurs when the budget deficit exceeds that level, that a recession occurs when the budget deficit falls below that level, and involuntary unemployment occurs. In order to recover from a recession, a budget deficit in excess of that level is required, and that deficit need not be covered by a future budget surplus. The same can be said for growth resulting from technological progress.

Budget Deficit and Full Employment

2000 ◽  
Vol 22 (4) ◽  
pp. 549-563 ◽  
Author(s):  
Julio Lopez-Gallardo
Keyword(s):  
Budget Deficit ◽  
Full Employment

scholarly journals Current Trends in Technical and Technological Development

2020 ◽  
Vol 12 (515) ◽  
pp. 47-52
Author(s):  
Y. V. Dubiei ◽  
Keyword(s):  
Information And Communication Technologies ◽  
Economic History ◽  
Technological Progress ◽  
Full Employment ◽  
Technological Development ◽  
Technological Leadership ◽  
New Knowledge ◽  
The World ◽  
Information And Communication ◽  
Labor Resources

The article is concerned with the main trends of technical and technological development, which are characteristic of the world economy in the 21st century. The facts of economic history relating to technical and technological development demonstrate the periodic change in technological leadership of certain countries of the world. The system of indicators is singled out, on the basis of which the country’s place in the global technological space is diagnosed, as well as the forecasting of further trends in its development on the path of scientific and technological progress is carried out. Based on the world rankings on the total domestic costs of science, their share in the gross domestic product of the country, the cost of R&D per researcher (equivalent to full employment) shows the provisions of individual countries as to financial support of technical and technological development. The research potential is described on the basis of such indicator as the total number of researchers in a particular country. It is demonstrated that these indicators, describing in its totality the level of provision of a particular country with financial and labor resources, through which new knowledge is created, do not always indicate its success. With the involvement of the indicators of research and patent activity (which reflect the number of published articles and submitted applications for patents), as well as the global index of innovations, plus the index of development of information and communication technologies (which characterize the result of technical and technological development achieved by the country), the directions of advancement of countries in terms of technology and technology are determined. It is identified that the provision of resources for the production of new knowledge is a necessary, but insufficient condition for obtaining technological primacy in the world. It is proposed to evaluate the positions achieved by the country on the path of technical and technological development through the formation of an internal indicator, which reflects both its provision of resources for the production of new knowledge and the degree of return on their use. It is proved that this approach to the evaluation of technical and technological development allows to obtain more thorough information about its sources and factors, as well as to identify weaknesses on which the country should focus to promote scientific and technological progress.

scholarly journals The Effects Of 2008 Global Crisis On Eurasian Countries' Economies

2010 ◽  
Author(s):  
Bilal Özer ◽  
Alper Karaağaç ◽  
Ismail Önden
Keyword(s):  
Technological Progress ◽  
World Economy ◽  
Budget Deficit ◽  
Price Index ◽  
Consumer Price Index ◽  
Communication Channels ◽  
Integrated System ◽  
General View ◽  
The World ◽  
Current Deficit

With the ongoing technological progress new transportation and communication channels have emerged, and interactions between people and therefore states has increased significantly. As a consequence of this development the concept of globalization, meaning the disappearance of the boundaries between states, has arisen. Thus the process of integration between the economies of states has started, which increased the dependency and interaction of the state economies. Hence, an economics crisis appearing in a particular state effects all of the countries integrated to this integrated system. In this study it is aimed to research that in what degree the Eurasian economies are integrated to the world economy, and affected from the recent economic crisis. The changes of the growth rates of the economies of Eurasian states during the crisis have been considered in order to employ them in the analysis of these affects. Moreover, by considering the basic economic indicators of those states such as unemployment rate, consumer price index, budget deficit, current deficit, it is aimed that to reach a general view of those states economic positions.

Involuntary Unemployment as a Nash Equilibrium and Fiscal Policy for Full Employment

2021 ◽  
pp. 2150018
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Nash Equilibrium ◽  
Fiscal Policy ◽  
Budget Deficit ◽  
Full Employment ◽  
Aggregate Demand ◽  
Fiscal Policies ◽  
Budget Deficits ◽  
Overlapping Generations Model ◽  
Involuntary Unemployment ◽  
Game Theoretic

This study aimed to provide a game-theoretic interpretation of the analyses of involuntary unemployment by deficiency of aggregate demand and fiscal policy to achieve full employment using an overlapping generations model. We showed that involuntary unemployment is in a Nash equilibrium of a game with a firm and consumers. Moreover, we showed that full employment can be achieved through fiscal policies that create budget deficits in recessionary conditions with involuntary unemployment. Once full employment is achieved, it can be sustained without a budget deficit.

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