Question
There is some controversy among Post Keynesians regarding whether or not an Job Guarantee (JG) program would be inflationary. Under some sets of very reasonable
There is some controversy among Post Keynesians regarding whether or not an Job Guarantee (JG) program would be inflationary. Under some sets of very reasonable assumptions, it is; under other equally reasonable assumptions, it's not. Let's have a look using the Kaleckian model. First off, say that under our JG, the government hires NG workers at wage rate WG. Assuming that these workers, like those in the consumption and investment goods sectors, spend all their money, we get PCQC = WCNC + WINI + WGNG (instead of PCQC= WCNC + WINI). Now derive the Kaleckian price equation (you should still end up with an equation that shows that prices are set by a markup over cost, but it will be more complicated). Does it appear that the JG would be inflationary? Brief answer please.
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