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On price stability with a job guarantee

Jackson Mejia and Brian Albrecht

Contemporary Economic Policy, 2022, vol. 40, issue 4, 568-584

Abstract: Modern Money Theory (MMT) has risen to prominence in popular policy debates within macroeconomics. MMT economists argue for creating a job guarantee program, which they argue would generate price stability. Using a benchmark model of time consistency supplemented with a job guarantee, we conclude that once policymakers' incentives are considered, the job guarantee does nothing to help stabilize prices. We compare this program to a competing proposal to maintain price stability and full employment, NGDP targeting.

Date: 2022
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https://doi.org/10.1111/coep.12573

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