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Savings-Recycling Public Employment: An Assets-Based Approach to Full Employment and Price Stability

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  • Mathew Forstater

Abstract

William Vickrey's single-minded commitment to full employment is evident in a series of papers written in the last years of his life. In these works Vickrey formulated an assets-based approach to macroeconomic analysis that has definite implications for budgetary and employment policy. For Vickrey the relation between desired and actual holdings of net financial assets--or net nominal savings--is crucial to understanding macroeconomic processes, and the government budget is the key policy instrument in the necessary recycling of net nominal savings to bring the desired and actual levels into equality at the full employment level of output and income. Vickrey believed that the major task for economists and policymakers was to devise the means whereby the necessary recycling of net nominal savings can take place without unexpected changes in the rate of either inflation or deflation. This paper proposes government deficit-financed, guaranteed public employment as an automatic stabilizing policy instrument capable of serving as just such a means.

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  • Mathew Forstater, 1999. "Savings-Recycling Public Employment: An Assets-Based Approach to Full Employment and Price Stability," Economics Working Paper Archive wp_273, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_273
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    1. William F. Mitchell, 1998. "The Buffer Stock Employment Model and the NAIRU: The Path to Full Employment," Journal of Economic Issues, Taylor & Francis Journals, vol. 32(2), pages 547-555, June.
    2. Warren Mosler, 1997. "Full Employment and Price Stability," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 20(2), pages 167-182, December.
    3. Mathew Forstater, 1998. "Flexible Full Employment: Structural Implications of Discretionary Public Sector Employment," Journal of Economic Issues, Taylor & Francis Journals, vol. 32(2), pages 557-563, June.
    4. Wynne Godley & L. Randall Wray, "undated". "Can Goldilocks Survive?," Economics Policy Note Archive 99-4, Levy Economics Institute.
    5. Warren Mosler, 1998. "Full Employment and Price Stability," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 20(2), pages 167-182, January.
    6. William Vickrey, 2004. "Meaningfully Defining Deficits and Debt," Chapters, in: Mathew Forstater & Pavlina R. Tcherneva (ed.), Full Employment and Price Stability, chapter 4, pages 27-32, Edward Elgar Publishing.
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