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Working Paper No. 273 Saving-Recycling Public Employment: An Assets-Based Approach To Full Employment and Price Stability by

By Mathew Forstater


William Vickrey's single-minded commitment to full employment is evident in a series of papers written in the last years of his life (Vickrey, 1992a, 1992b, 1993a, 1993b, 1993c, 1994, 1996, 1997). In this work, Vickrey formulated an assets-based approach to macroeconomic analysis with definite implications for budgetary and employment policy. In Vickrey's approach, the difference between desired and actual holdings of net financial assets—or net nominal savings — is the crucial relation in 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. VICKREY'S COMMITMENT TO FULL EMPLOYMENT For Vickrey, 1926 was the last time there was an acceptable level of employment during peace time in the U.S. (Vickrey, 1994, p. 39). He embraced the Beveridge definition that defines full employment as holding when "there are at least as many unfilled job openings as there are unemployed individuals seeking work " (Vickrey

Year: 1999
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