tag:blogger.com,1999:blog-5908830827135060852.post8213023229579428861..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: On Using NAIRU To Analyse A Job GuaranteeBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-5908830827135060852.post-3185743615694462292017-11-22T23:25:06.939-05:002017-11-22T23:25:06.939-05:00Looking forward to it, Brian.
Happy Thanksgiving!...Looking forward to it, Brian.<br /><br />Happy Thanksgiving!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-72509378023251002042017-11-22T10:02:20.657-05:002017-11-22T10:02:20.657-05:00I have developed a proof that there is no equivale...I have developed a proof that there is no equivalent to NAIRU in an economy with a JG, but there is no space to write it here.<br /><br />Actually, the proof is coming in a few days.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-23925320617277715852017-11-22T09:32:12.811-05:002017-11-22T09:32:12.811-05:00As a layman, I have some serious questions about t...As a layman, I have some serious questions about the NAIRU concept. First, it has never been observed. Second, takes the actions of employers as a given, like a force of nature. Third, it ignores general properties of long lived complex adaptive systems, which is that they tend to at least temporary stability, if not equifinality. Economists are quick to embrace the concept of equilibrium, except in the case of the NAIRU. The A stands for "accelerating", which means not only persistent inflation, which a kind of arms race could generate as employers and workers vie for the economic surplus, but runaway inflation. Yes, we have seen runaway inflation, but only as a result of low unemployment? Bueller? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-10189075034345294502017-11-20T11:37:45.811-05:002017-11-20T11:37:45.811-05:00So where is all the inflation in nature at full em...So where is all the inflation in nature at full employment, Ralph?<br /><br />Over time, the real goods we get in return for our day's work (which is the true constant) have undergone massive 'price' deflation and will continue to do so.<br /><br />And yet, people like you still argue that others must not work in order that you can have even more.<br /><br />Why don't YOU volunteer to not work if you believe it's true?James Brownnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-3567647067523586882017-11-20T06:58:19.060-05:002017-11-20T06:58:19.060-05:00Ralph,
According to SWL’s model, if you create a ...Ralph,<br /><br />According to SWL’s model, if you create a JG with a high wage, it causes deflation. A large numbet of people join the programme, and the NW percentage is greater than NAIRU, and *inflation has a negative acceleration*.<br /><br />If you cannot see that as absurd, you cannot be helpd.<br /><br />As for you other points, they have no value. He made a specific numerical claim, and without a reliable numerical model, that claim is invalid.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-18149157450262868302017-11-20T03:08:59.939-05:002017-11-20T03:08:59.939-05:00I am not greatly impressed with Ralph's commen...I am not greatly impressed with Ralph's comments here or at Mainly Macro. <br /><br />Thank goodness the gravitational constant does not change like the NAIRU (estimate? is that what we can call it?). If it did I would never get on an airplane again. <br /><br />So here is a reply to your comment at Mainly Macro which I didn't submit because Simon likes everything to be polite-<br /><br />Ralph Musgrave, there are surely many naive people in this world. Luckily we have more sophisticated people like yourself to explain things to us. But it is possible that you may not realize that in the country I live in (the USA), there really are not any benefits that a person gets just for being unemployed past the end of unemployment insurance- typically 26 weeks. And you had to be employed for quite a while to be eligible for that in the first place. So I am not sure Calmfors' particular criticism of the Job Guarantee would apply here in the US. <br /><br />I don't have time for any more of Ralph's points, if that's what they are.Jerry Brownnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-22354348870481400112017-11-20T02:30:14.110-05:002017-11-20T02:30:14.110-05:00Ralph, I know you have read Mitchell on this subje...Ralph, I know you have read Mitchell on this subject and I think you would agree that for the most part MMT considers the NAIRU concept to be useless. THERE IS NOT necessarily a relationship between inflation and unemployment. MMT says that inflation will be caused by excessive spending when supply and its growth is constrained. There are many possibilities for inflation that do not at all depend on the unemployment rate. And there are many unemployment rates that can correspond with non-accelerating inflation rates. Which means tying a level of unemployment to observed inflation is useless. That is what NAIRU is- useless. Jerry Brownnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-19758771389602385842017-11-20T02:23:54.827-05:002017-11-20T02:23:54.827-05:00*loose *loose NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-16234239398819699482017-11-20T02:21:07.413-05:002017-11-20T02:21:07.413-05:00NAIRU is the exhaustion of the unemployment buffer...NAIRU is the exhaustion of the unemployment buffer at specific micro-physical points in the currency area sufficient to cause a dynamic feedback effect that impacts inflation. That happens because the unemployment buffer is insufficient threat to the labour services of private firms and policy is too lose. <br /><br />You don't get anywhere near that on a Job Guarantee because you actually set policy *tighter* than you would under monetary policy targeting. You never want the non-guarantee employment buffer to exhaust anywhere. But because Job Guarantee cleans up crap private firms and is spatially targeted to areas without enough work (unlike tax credits which are pro-cyclical spatially and pro-crap firms) you actually get a higher aggregate across the currency area, by lowering the peak points that cause the problem under MP targeting. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-56300399143820775102017-11-20T01:30:46.137-05:002017-11-20T01:30:46.137-05:00“How useless NAIRU is”. So there’s no relationship...“How useless NAIRU is”. So there’s no relationship between inflation and unemployment? Great: in that case why don’t the advocates of “NAIRU is useless” advocate a massive increase in demand with a view to drastically cutting unemployment? Reason is that they know perfectly well that THERE IS a relationship between inflation and unemployment.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-74559394181713407872017-11-20T01:27:00.626-05:002017-11-20T01:27:00.626-05:00I’m not greatly impressed by Brian’s criticisms of...I’m not greatly impressed by Brian’s criticisms of Wren-Lewis’s claim that a relatively well paid JG jobs put upward pressure on inflation, and for the following reasons.<br /><br />Brian says “NAIRU is obviously not a constant in the current institutional environment. Any attempt to specify NAIRU as a constant fails statistically.”<br /><br />My answer to that is that no one ever said NAIRU was constant, far as I know. Plus the fact that some relationship like NAIRU is not constant does not mean one cannot make various valid statements about relevant variables. For example if the gravitational constant keeps changing randomly between plus or minus 50%, it would still true to say that apples will fall from trees towards the centre of the earth.<br /><br />Next, Brian says “We have no idea what determines NAIRU in the current environment.”<br /><br />I suggest anyone with a small amount of common sense has at least SOME IDEA what determines NAIRU. For example it is obviously true to say that the more skilled the workforce is, the lower will NAIRU be all else equal. And for second example, a recent spell of high unemployment probably induces unions to moderate their wage demands for a year or two and thus reduce NAIRU.<br /><br />Next Brian says “If we change institutional structure, NAIRU is unchanged.” <br /><br />My answer to that is that if Brian wants to accuse Wren-Lewis of saying or implying something obviously absurd, Brian needs to produce some very detailed explanation.<br /><br />I don’t have time for any more of Brian’s points. But I’ll end by saying that Wren-Lewis’s point (which incidentally is not original) is quite clearly valid: i.e. the higher is JG pay, the less the incentive for those concerned to sek regular jobs which in turn cuts aggregate labour supply to the regular jobs market, which in turn is inflationary, unless AD is cut.<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-9134667106382091862017-11-19T12:03:14.547-05:002017-11-19T12:03:14.547-05:00I couldn’t figure it, since I assumed that “he can...I couldn’t figure it, since I assumed that “he cannot really mean that”. I guess he didn’t think about the dynamics for more than a minute or two.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-25841804093478541672017-11-19T11:52:21.298-05:002017-11-19T11:52:21.298-05:00Nice post. I hadn't understood what Wren-Lewi...Nice post. I hadn't understood what Wren-Lewis was saying there about NAIRU and a Job Guarantee and figured it was the usual JG will be inflationary because unemployment would be below the non-accelerating rate. Of course, MMT solves this by just pointing out how useless NAIRU is :). Jerry Brownnoreply@blogger.com