Abstract
Many of the major debates in macroeconomics are conducted within the Phillips Curve framework. The debate has moved over time from the policy menu tradeoff between inflation and unemployment to the natural rate world, where unemployment is considered voluntary and there is no discretionary role for aggregate demand management. Modern Monetary Theory (MMT) takes a different approach and identifies two buffer stock approaches to maintaining price stability in a fiat monetary system: (a) unemployment buffer stocks; (b) employment buffer stocks (Job Guarantee). We show that the former is very costly in terms of foregone output and income. Conversely, the Job Guarantee flattens the conventional Phillips Curve by allowing a nation to maintain (loose) full employment with price stability.
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