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

In: The Job Guarantee and Modern Money Theory

Author

Listed:
  • William Mitchell

    (University of Newcastle)

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.

Suggested Citation

  • William Mitchell, 2017. "The Job Guarantee: A Superior Buffer Stock Option for Government Price Stabilisation," Binzagr Institute for Sustainable Prosperity, in: Michael J. Murray & Mathew Forstater (ed.), The Job Guarantee and Modern Money Theory, chapter 0, pages 47-72, Palgrave Macmillan.
    • Handle: RePEc:pal:bifchp:978-3-319-46442-8_3
    DOI: 10.1007/978-3-319-46442-8_3
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    Cited by:

    1. Jackson Mejia & Brian C. Albrecht, 2022. "On price stability with a job guarantee," Contemporary Economic Policy, Western Economic Association International, vol. 40(4), pages 568-584, October.

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