The Job Guarantee: A Superior Buffer Stock Option for Government Price Stabilisation

William Mitchell
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William Mitchell: University of Newcastle

Chapter Chapter 3 in The Job Guarantee and Modern Money Theory, 2017, pp 47-72 from Palgrave Macmillan

Abstract: Abstract Governments have two broad buffer stock options when it comes to price stabilisation: (a) Unemployment buffer stocks: Under a mainstream NAIRU regime (the current orthodoxy), inflation is controlled using tight monetary and fiscal policy, which leads to a buffer stock of unemployment. This is a very costly and unreliable target for policy makers to pursue as a means for inflation proofing. (b) Employment buffer stocks: The government exploits the fiscal power embodied in a fiat-currency issuing national government to introduce full employment based on an employment buffer stock approach. The Job Guarantee (JG) model which is central to Modern Monetary Theory (MMT) is an example of an employment buffer stock policy approach. In this paper, we juxtapose the two buffer stock options from the point of inflation control with a discussion of where they fit into the literature on the Phillips curve and consider the macroeconomic efficiency implications of each. The discussion will consider the implications for the fiscal position of the government arising from each option.

Keywords: Minimum Wage; Fiscal Policy; Full Employment; Price Stability; Phillips Curve (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:pal:bifchp:978-3-319-46442-8_3

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DOI: 10.1007/978-3-319-46442-8_3

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