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Tag Archives: Job & Income Guarantee

Macro Dynamics with a Job Guarantee – Part 6: Price Stabilization

The previous part of the series introduced a short-run relationship between prices and output, P(Y), that is in keeping with a Kaleckian or Keynesian understanding of demand-led economies. According to this view, within the economy’s capacity limits, output reflects demand while prices reflect cost. So long as supply conditions remain unaltered, variations in demand are met with variations in production at stable prices. But when spending goes beyond the economy’s current capacity to...

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Macro Dynamics with a Job Guarantee – Part 5: Price Level

So far, in considering a simplified economy with a job guarantee, the focus has been on the demand-determined behavior of output and employment. Prices, in this exercise, have simply been taken as given on the grounds that they are not causally significant in the process. This approach does not require prices to remain constant, though, for given supply conditions, they may well do so over a fairly wide range of output for reasons to be discussed. Nor does it require that prices are...

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Macro Dynamics with a Job Guarantee – Part 4: Dynamic Stability

The model, in its present form, is short run in nature. It concerns an economy for which total employment, within-sector productivity and productive capacity are all taken as given. Variations in total output are achieved by workers transferring between two broad sectors that have differing productivity. In considering this economy, discussion has touched on aspects of a steady state and system behavior outside the steady state. It has been supposed, in the event of exogenous shocks, that...

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Macro Dynamics with a Job Guarantee – Part 3: Adjustment Process

The model as outlined so far implies particular dynamics. These dynamics are driven by the quantity response of the broader economy (sector b) to mismatches in supply and demand. With the size of the labor force, level of total employment, within-sector productivity and the economy’s productive capacity all taken as exogenously given, the quantity response of sector b requires a change in the sector’s level of employment. The response of sector b induces an inverse response from the...

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Macro Dynamics with a Job Guarantee – Part 2: Keynesian Cross Diagram

As a preliminary exercise, it may be instructive to modify the familiar Keynesian cross diagram to include the effects of a job guarantee within a simple short-run framework. The diagram includes two key schedules. The first is a 45-degree line showing all points for which actual expenditure equals actual income. The second is a line with lesser slope depicting the level of planned expenditure (total demand) at each level of income. Under appropriate conditions, the two schedules intersect...

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Macro Dynamics with a Job Guarantee – Part 1: Overview

The job guarantee as proposed by Modern Monetary Theorists would provide a publicly funded job with defined wage and benefits to anyone who desired one, with public spending on the program varying automatically and countercyclically in response to take-up of positions. In a downturn, workers who lost their jobs would have the option of accepting the job-guarantee offer. As the economy recovered, some workers would receive better offers elsewhere. By design, the job-guarantee provider would...

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Fairness and a ‘Job or Income Guarantee’

Of the various criticisms leveled at a combined ‘job or income guarantee‘, ones appealing to fairness usually go along the lines that it would be unfair for healthy individuals outside the workforce to receive an income while others are occupied in jobs. In considering this objection, a number of points come to mind: 1. the arbitrariness of exempting the wealthy from any expectation that income of the able-bodied be conditional on labor-force participation; 2. the range of options that...

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Illustration of Dynamic Adjustment with a Job Guarantee

In some recent posts, a job guarantee has been considered within the income-expenditure framework. One post in particular suggested a possible conceptualization of the dynamics of the model. It was shown that these dynamics are consistent with the model’s steady state requirements. Demonstrating this took a fair bit of algebra, which may have obscured for some readers the simplicity of the actual model. Much of the algebra was only needed for the specific purpose of verifying that the...

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Some Aspects of a Steady State with a Job Guarantee

The first section of the previous post outlined basic steady state relationships in a simplified economy with a job guarantee. There are various ways of expressing the same relationships that shed light on what is going on in the model. Here, a few ways of thinking about the levels of total income and job guarantee spending are noted.  Two Reference Points The presentation in the previous post was guided by a desire to have all key expressions share the same denominator. The common...

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Quantity Dynamics with a Job Guarantee

A job guarantee would be a standing offer of a publicly funded job. Spending on the program would adjust automatically and countercyclically in response to take-up of positions. The likely feedback between spending on the program and activity in general is interesting and can be considered within the income-expenditure framework. In what follows, the standard model is modified to find the steady state levels and compositions of income and employment and other key variables. Attention then...

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