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Fiscal policy and the job guarantee

Author

Listed:
  • William F. Mitchell

    (University of Newcastle)

  • Warren B. Mosler

Abstract

Most OECD economies have suffered from persistently high unemployment since the mid-1970s as a result of demand deficiencies promoted by inappropriate fiscal and monetary policy. Governments have failed to understand the opportunities that they have as the issuer of the currency. In this paper, a framework for analysing these opportunities is presented. We compare two buffer-stock means of stabilising the price level: (a) the NAIRU approach, which uses a buffer stock of unemployed; and (b) the Job Guarantee, which is an open ended, fixed wage buffer stock of employed workers. The government offers a fixed wage to anyone willing and able to work, and allows market forces to determine the total quantity of government spending. This option is available to the government as the monopoly issuer of fiat currency.

Suggested Citation

  • William F. Mitchell & Warren B. Mosler, 2002. "Fiscal policy and the job guarantee," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 5(2), pages 243-259, June.
    • Handle: RePEc:ozl:journl:v:5:y:2002:i:2:p:243-259
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    Citations

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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.
    2. William Mitchell & Sally Cowling, 2003. "False promise or false premise? Evaluating the job network," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(2), pages 207-226, June.
    3. Esteban Cruz-Hidalgo & Dirk H. Ehnts & Pavlina R. Tcherneva, 2019. "Completing the euro: The euro treasury and the job guarantee," Revista de Economía Crítica, Asociación de Economía Crítica, vol. 27, pages 100-111.
    4. Abbas Valadkhani, 2005. "Cross-country analysis of high employment-generating industries," Applied Economics Letters, Taylor & Francis Journals, vol. 12(14), pages 865-869.

    More about this item

    Keywords

    Macroeconomics; employment; unemployment; wages; wage indexation Financial markets and the macroeconomy Comparative or joint analysis of fiscal and monetary policy; stabilization policy;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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