MMT or Public Enterprises? A Contribution to Economic Sustainability

Abstract

According to Modern Monetary Theory (MMT), modern governments finance their spending primarily through the creation of money rather than from the proceeds of taxation and bond sales. This article emphasizes that the government has the responsibility to create economic sustainability and analyzes MMT from the perspective of sustainable finance for economic sustainability. In the policy framework of the European Union (EU), sustainable finance refers to the institutional process of taking environmental, social, and governance (ESG) considerations into account when financial institutions or government authorities make investment decisions to promote sustainability. In principle, public enterprises owned by the government are required to comply with the standards of sustainable finance. During the global transition to achieve the Sustainable Development Goals (SDGs), public enterprises can be employed in a timely manner to complement private companies lacking a sustainable vision or whose promotion of sustainable activities has been delayed. This article points out that the government can not only set sustainable guidelines for private companies, but can also directly initiate the state default, i.e., public enterprises, in the promotion of economic sustainability.

Keywords:

• MMT
• public enterprises
• economic sustainability
• sustainable finance
• economic planning

JEL Classification Codes:

• O20
• B52
• G20
• P30

Notes

1 See U.S. Federal Reserve (2020)

2 See Network for Greening the Financial System (NGFS) (n.d.)

3 See U.S. Department of The Treasury (2021)

4 See European Commission (2018)

5 See European Commission (2020)

6 See European Commission (2021)

7 See ICE (2021)

8 The NYSE is an ICE group member.

9 See CME Group (n.d.)

10 See Federal Reserve Bank of Atlanta (2021), California Office of Sustainability 2021), and City of Charlotte (2021).

11 See Swedavia (2021)

12 See Government Offices of Sweden (2018)

Additional information

Notes on contributors

Brian Chi-ang Lin

Brian Chi-ang Lin is a professor in the Department of Public Finance at the National Chengchi University, Taipei, Taiwan.