Public Policy for Working People

Michael J. Murray
Additional contact information
Michael J. Murray: Bemidji State University

Chapter Chapter 2 in The Job Guarantee and Modern Money Theory, 2017, pp 25-46 from Palgrave Macmillan

Abstract: Abstract Given the ineffectiveness of contemporary monetary and fiscal policy, this chapter begs the question, is there a better alternative? The chapter opens with New Keynesian fallacies and the need for public policy centered on workers. The hope is that this chapter can provide further justification for the Employer of Last Resort (ELR) approach to full employment, by rooting it in the theoretical framework of Classical Keynesian Political Economy. Further, while modeling the ELR within a CKPE production model, this chapter deviates slightly from the existing literature on the ELR by modeling a fully funded, budget-neutral ELR program; but (hopefully) with good reason. Elsewhere, Wray (1998) and others have discussed the macroeconomic outcomes of an ELR program operating under the principles of Modern Money Theory (MMT). Wray, and proponents of MMT, more or less, articulate the outcomes of a fully deficit-financed ELR. Here the opposite extreme is analyzed, and the simulation asks … what are the macroeconomic outcomes of a budget-neutral ELR? These results are important for governments operating non-sovereign currencies to understand. But the result may also be interesting for countries wishing to operate an ELR with a sovereign currency. In practice, even with a sovereign currency, a government would most likely not operate an ELR at either extreme; rather the government would partially fund an ELR (perhaps for political reasons if anything else). Thus by countering the MMT model with a balanced budget model, public policy officials can understand the effects at each extreme and get a better idea of what the macroeconomic outcomes would be if an ELR were operating some place in the middle.

Keywords: Gross Domestic Product; Fiscal Policy; Full Employment; Neoclassical Economic; Real Gross Domestic Product (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:bifchp:978-3-319-46442-8_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9783319464428

DOI: 10.1007/978-3-319-46442-8_2

Access Statistics for this chapter

More chapters in Binzagr Institute for Sustainable Prosperity from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().