In economics, non-accelerating inflation buffer employment ratio (NAIBER) refers to a systemic proposal for an in-built inflation control mechanism devised by economists Bill Mitchell and

Warren Mosler Warren Mosler (born September 18, 1949) is an American hedge fund executive and entrepreneur. He is a co-founder of the Center for Full Employment And Price Stability at University of Missouri-Kansas City and the founder of Mosler Automotive. Mo ...

, and advocated by

Modern Money Theory Modern monetary theory or modern money theory (MMT) is a heterodox macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial ass ...

as replacement for NAIRU (non-accelerating inflation rate of unemployment). The concept of NAIBER is related to the idea of a

job guarantee A job guarantee is an economic policy proposal that aims to create full employment and price stability by having the state promise to hire unemployed workers as an employer of last resort (ELR). It aims to provide a sustainable solution to inf ...

aimed to create

full employment Full employment is an economic situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may ...

and price stability, by having the state promise to hire unemployed workers as an employer of last resort (ELR). L. Randall Wray
"Job Guarantee"
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Description

If the

Phillips curve The Phillips curve is an economic model, named after Bill Phillips, that correlates reduced unemployment with increasing wages in an economy. While Phillips did not directly link employment and inflation, this was a trivial deduction from his ...

displays

hysteresis Hysteresis is the dependence of the state of a system on its history. For example, a magnet may have more than one possible magnetic moment in a given magnetic field, depending on how the field changed in the past. Plots of a single component of ...

—that is, if episodes of high unemployment raise the NAIRU—the NAIRU analysis is especially problematic. This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed. Economists as

Abba Lerner Abraham "Abba" Ptachya Lerner (also Abba Psachia Lerner; 28 October 1903 – 27 October 1982) was a Russian-born American-British economist. Biography Born in Novoselytsia, Bessarabia, Russian Empire, Lerner grew up in a Jewish family, which e ...

and

Hyman Minsky Hyman Philip Minsky (September 23, 1919 – October 24, 1996) was an American economist and economy professor at Washington University in St. Louis. A distinguished scholar at the Levy Economics Institute of Bard College, his research was inten ...

have argued that a similar effect can be achieved without the human costs of unemployment via a

, where rather than being unemployed, those who cannot find work in the private sector should be employed by the government. This theory, and the policy of the job guarantee replaces the NAIRU with the NAIBER (non-accelerating inflation buffer employment ratio). The ''buffer employment ratio'' (BER) is the ratio of job guarantee employment to total employment. The BER conditions the overall rate of wage demands. When the BER is high, real wage demands will be correspondingly lower. If inflation exceeds the government's announced target, tighter fiscal and monetary policy would be triggered to increase the BER, which entails workers transferring from the inflating sector to the fixed price job guarantee sector. Ultimately, this reduces the inflation spiral. So instead of a buffer stock of unemployed being used to discipline the distributional struggle, the job guarantee policy achieves this via compositional shifts in employment. Replacing the current ''non-accelerating inflation rate of unemployment'' (

NAIRU The non-accelerating inflation rate of unemployment (NAIRU) is a theoretical level of unemployment below which inflation would be expected to rise.

), the BER that results in stable inflation is called the ''non-accelerating inflation buffer employment ratio'' (NAIBER). It is a full employment steady state level, which is dependent on a range of factors, such as the path of the economy.W.F. Mitchell and J. Muysken (2008).
Full Employment Abandoned: Shifting Sands and Policy failures
,''. Edward Elgar:

Cheltenham Cheltenham () is a historic spa town and borough adjacent to the Cotswolds in Gloucestershire, England. Cheltenham became known as a health and holiday spa town resort following the discovery of mineral springs in 1716, and claims to be the mo ...

. Revised: January 200

Footnotes

References

* * * * . Introduction to modern (as of 2009) Chartalism. * * * {{Refend Macroeconomic policy Post-Keynesian economics Public employment Full employment Right to work

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See also

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References