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The Job Guarantee and the Phillips Curve

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  • William Mitchell

Abstract

Many of the major debates in macroeconomics are conducted within the Phillips Curve framework. The debate has moved over time from the policy menu tradeoff between inflation and unemployment to the natural rate world, where unemployment is considered voluntary and there is no discretionary role for aggregate demand management. Modern Monetary Theory (MMT) takes a different approach and identifies two buffer stock approaches to maintaining price stability in a fiat monetary system: (a) unemployment buffer stocks; (b) employment buffer stocks (Job Guarantee). We show that the former is very costly in terms of foregone output and income. Conversely, the Job Guarantee flattens the conventional Phillips Curve by allowing a nation to maintain (loose) full employment with price stability.

Suggested Citation

  • William Mitchell, 2020. "The Job Guarantee and the Phillips Curve," Japanese Economy, Taylor & Francis Journals, vol. 46(4), pages 240-260, October.
    • Handle: RePEc:mes:jpneco:v:46:y:2020:i:4:p:240-260
    DOI: 10.1080/2329194X.2020.1864746
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    Cited by:

    1. Summa, Ricardo de Figueiredo, 2022. "Alternative uses of functional finance: Lerner, MMT and the Sraffiansh," IPE Working Papers 175/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. M S, Navaneeth, 2021. "Business Cycles, Inflation and Unemployment: An MMT perspective," MPRA Paper 115352, University Library of Munich, Germany.

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