Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the Periphery
This paper explores a development strategy for peripheral economies by advocating for a paradigm shift from traditional economic models that rely on accumulating foreign reserves. It proposes the job guarantee (JG) policy, an automatic stabilizer based on a reserve pool of employed individuals, as a...
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2025-01-01
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| Online Access: | https://www.mdpi.com/2227-7099/13/1/9 |
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| author | Esteban Cruz-Hidalgo Stuart Medina-Miltimore Agustín Mario |
| author_facet | Esteban Cruz-Hidalgo Stuart Medina-Miltimore Agustín Mario |
| author_sort | Esteban Cruz-Hidalgo |
| collection | DOAJ |
| description | This paper explores a development strategy for peripheral economies by advocating for a paradigm shift from traditional economic models that rely on accumulating foreign reserves. It proposes the job guarantee (JG) policy, an automatic stabilizer based on a reserve pool of employed individuals, as a cornerstone for fostering sustainable and inclusive growth. Grounded in modern monetary theory (MMT), this study critiques the conventional approach that prioritizes external reserves and highlights the potential of MMT in offering a more autonomous development path for developing countries. A systematic review of the literature, using the PRISMA methodology, reveals significant divergence between MMT advocates and critics, particularly regarding monetary sovereignty and the feasibility of implementing macroeconomic policies in peripheral economies. This study emphasizes that while external constraints remain, the MMT perspective calls for flexible exchange rates, low interest rates, and capital controls as part of a broader strategy to reduce dependency on foreign currencies. The proposed approach prioritizes full employment, the mobilization of domestic resources, and structural transformation through policies like import substitution. Although the shift may involve the slower accumulation of capital, it offers a more equitable and stable development path. Ultimately, this analysis underscores the potential of MMT to expand the external constraint and enable sustainable development, despite challenges in implementation and political resistance. |
| format | Article |
| id | doaj-art-a4d0cff66ddd4170bd7f26644e0c3ad3 |
| institution | Kabale University |
| issn | 2227-7099 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | MDPI AG |
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| series | Economies |
| spelling | doaj-art-a4d0cff66ddd4170bd7f26644e0c3ad32025-01-24T13:30:00ZengMDPI AGEconomies2227-70992025-01-01131910.3390/economies13010009Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the PeripheryEsteban Cruz-Hidalgo0Stuart Medina-Miltimore1Agustín Mario2Department of Economics, University of Extremadura, 06006 Badajoz, SpainInternational Doctoral School, University of Extremadura, 06006 Badajoz, SpainDepartment of Economics and Administration, National University of Moreno, Moreno B1744OHC, Buenos Aires, ArgentinaThis paper explores a development strategy for peripheral economies by advocating for a paradigm shift from traditional economic models that rely on accumulating foreign reserves. It proposes the job guarantee (JG) policy, an automatic stabilizer based on a reserve pool of employed individuals, as a cornerstone for fostering sustainable and inclusive growth. Grounded in modern monetary theory (MMT), this study critiques the conventional approach that prioritizes external reserves and highlights the potential of MMT in offering a more autonomous development path for developing countries. A systematic review of the literature, using the PRISMA methodology, reveals significant divergence between MMT advocates and critics, particularly regarding monetary sovereignty and the feasibility of implementing macroeconomic policies in peripheral economies. This study emphasizes that while external constraints remain, the MMT perspective calls for flexible exchange rates, low interest rates, and capital controls as part of a broader strategy to reduce dependency on foreign currencies. The proposed approach prioritizes full employment, the mobilization of domestic resources, and structural transformation through policies like import substitution. Although the shift may involve the slower accumulation of capital, it offers a more equitable and stable development path. Ultimately, this analysis underscores the potential of MMT to expand the external constraint and enable sustainable development, despite challenges in implementation and political resistance.https://www.mdpi.com/2227-7099/13/1/9job guaranteefull employmentsustainable developmentflexible exchange ratesperipheral economiesmodern monetary theory |
| spellingShingle | Esteban Cruz-Hidalgo Stuart Medina-Miltimore Agustín Mario Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the Periphery Economies job guarantee full employment sustainable development flexible exchange rates peripheral economies modern monetary theory |
| title | Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the Periphery |
| title_full | Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the Periphery |
| title_fullStr | Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the Periphery |
| title_full_unstemmed | Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the Periphery |
| title_short | Currencies Come and Go, But Employment Always Takes Root: Rethinking External Constraints and Monetary Sovereignty in the Periphery |
| title_sort | currencies come and go but employment always takes root rethinking external constraints and monetary sovereignty in the periphery |
| topic | job guarantee full employment sustainable development flexible exchange rates peripheral economies modern monetary theory |
| url | https://www.mdpi.com/2227-7099/13/1/9 |
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