AIMS Research Page

Latest Research

Part of our mission is to research ways in which Monetary Sovereignty may be safely utilised by governments. Papers reporting on that research will be published here.

Constraint Driven Macroeconomics (CDM) V1.0

Monetarily sovereign governments, as explained by Modern Monetary Theory (MMT), do not face financial constraints in their own currency; they face real constraints: labour, energy, materials, logistics, technology, and time. Eliyahu Goldratt’s Theory of Constraints (ToC) offers a disciplined method to identify and elevate bottlenecks in complex systems. Constraint-Driven Macroeconomics (CDM) fuses MMT’s operational clarity about money with ToC’s practical method for throughput management. The result is a replicable, data-driven policy framework that (1) identifies economy-limiting constraints, (2) aligns fiscal, regulatory, and credit tools to exploit and elevate those constraints, and (3) uses inflation as the macro signal of capacity stress. We set out concepts, metrics, an institutional design, and an implementation roadmap for the UK, with transferable lessons for other sovereign issuers.

In doing so, this paper makes five specific contributions: (1) it integrates Modern Monetary Theory with the Theory of Constraints into a unified macro-fiscal framework; (2) it defines a Constraint Index (CI) and Inflation Risk Index (IRI) for identifying and ranking bottlenecks; (3) it presents an operational inflation decomposition linked to real constraints; (4) it specifies institutional and governance arrangements for a National Constraint Board and associated dashboards; and (5) it outlines an implementable allocation algorithm and roadmap suitable for empirical testing and policy adoption.

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Foreign Aid Without Cost:Monetary Sovereignty, Sterling Tradability, and the Real Economics of UK International Assistance

Foreign aid is universally framed as a fiscal burden on donor states, requiring higher taxation, borrowing, or reduced domestic expenditure. This paper challenges that premise for countries that issue their own internationally traded currencies. Focusing on the United Kingdom and sterling, we show that foreign aid paid in domestic currency does not necessarily constitute a transfer of real resources from the donor economy. Under identifiable monetary and market conditions, such aid functions primarily as an external monetary injection, expanding offshore currency holdings rather than displacing domestic activity. Drawing on Modern Monetary Theory (MMT), international monetary theory, and a constraint-based approach to inflation, we argue that well-designed sterling-denominated aid is macroeconomically neutral or positive for the UK, while supporting global development and financial stability. The analysis reframes foreign aid from a budgetary sacrifice into a tool of monetary circulation and capacity management.

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