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


  • Mathew Forstater

    (The Jerome Levy Economics Institute)


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.

Suggested Citation

  • Mathew Forstater, 1999. "Savings-Recycling Public Employment: An Assets-Based Approach to Full Employment and Price Stability," Macroeconomics 9908003, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9908003 Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 19; figures: included

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    References listed on IDEAS

    1. Wynne Godley & L. Randall Wray, "undated". "Can Goldilocks Survive?," Economics Policy Note Archive 99-4, Levy Economics Institute.
    2. Vickrey, William, 1992. "Meaningfully Defining Deficits and Debt," American Economic Review, American Economic Association, vol. 82(2), pages 305-310, May.
    3. repec:mes:jeciss:v:32:y:1998:i:2:p:547-555 is not listed on IDEAS
    4. L. Randall Wray, 1997. "Government as Employer of Last Resort: Full Employment without Inflation," Economics Working Paper Archive wp_213, Levy Economics Institute.
    5. Vickrey, William, 1993. "Today's Task for Economists," American Economic Review, American Economic Association, vol. 83(1), pages 1-10, March.
    6. repec:mes:jeciss:v:32:y:1998:i:2:p:557-563 is not listed on IDEAS
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    JEL classification:

    • E - Macroeconomics and Monetary Economics


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