On Price Stability with a Job Guarantee

Jackson Mejia and Brian C. Albrecht

Contemporary Economic Policy 2022

PDF Published Version DOI: 10.1111/coep.12573

Abstract

Modern Money Theory (MMT) has risen to prominence in popular policy debates within macroeconomics. MMT economists argue for creating a job guarantee program, which they argue would generate price stability. Using a benchmark model of time consistency supplemented with a job guarantee, we conclude that once policymakers' incentives are considered, the job guarantee does nothing to help stabilize prices. We compare this program to a competing proposal to maintain price stability and full employment, NGDP targeting.

Key Insight

Once policymaker incentives are considered, job guarantees do not stabilize prices.

Keywords

  • Modern Money Theory
  • MMT
  • job guarantee
  • price stability
  • monetary policy
  • NGDP targeting

Citation

Jackson Mejia and Brian C. Albrecht (2022). "On Price Stability with a Job Guarantee." Contemporary Economic Policy. DOI: 10.1111/coep.12573

BibTeX

@article{mmt_job_guarantee,
  title = {On Price Stability with a Job Guarantee},
  author = {Jackson Mejia and Brian C. Albrecht},
  year = {2022},
  journal = {Contemporary Economic Policy},
  doi = {10.1111/coep.12573},
  url = {https://onlinelibrary.wiley.com/doi/10.1111/coep.12573}
}