| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP11941
|
| DP11941 The Fallacy of the Fiscal Theory of the Price Level - Once More |
| Willem Buiter
|
| 发表日期 | 2017-03-27
|
| 出版年 | 2017
|
| 语种 | 英语
|
| 摘要 | Necessary conditions for valid dynamic general equilibrium analysis include: (1) the number of equations equals the number of unknowns; (2) the number of state variables equals the number of boundary conditions; (3) if (1) and (2) hold, the resulting solution(s) make sense. The fiscal theory of the price level fails on all three counts, both away from and at the ELB. The underlying fallacy is the confusion of the intertemporal budget constraint of the State with a misspecified government bond pricing equilibrium equation. This means overdetermined systems unless (a) the price level is flexible, (b) the interest rate is the monetary policy instrument and (c) there is a non-zero stock of nominal government bonds. Thus, a sticky price level or a nominal money stock rule imply inconsistency. When all three conditions are satisfied, unacceptable anomalies occur: negative price levels; the FTPL can price money when money does not exist; the logic of the FTPL applies equally to the intertemporal budget constraint of any household; when the bond pricing equation is specified correctly, there is no FTPL.
The FTPL has nothing to do with monetary vs. fiscal dominance or active v. passive fiscal policy.
The FTPL implies government debt is never a problem; the price level takes care of it, and not through unanticipated inflation or financial repression. If acted upon by fiscal authorities, the consequences could be severe.
There is a correct fiscal theory of seigniorage. The issuance of return-dominated and/or irredeemable central bank money creates fiscal space and ensures that a combined monetary-fiscal stimulus always boosts nominal aggregate demand. |
| 主题 | Financial Economics
; Monetary Economics and Fluctuations
; Public Economics
|
| 关键词 | Fiscal theory of the price level
Intertemporal budget constraint
Equilibrium bond pricing equation
Monetary and fiscal policy coordination
Fiscal dominance
|
| URL | https://cepr.org/publications/dp11941
|
| 来源智库 | Centre for Economic Policy Research (United Kingdom)
|
| 资源类型 | 智库出版物
|
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/540753
|
推荐引用方式
GB/T 7714 |
Willem Buiter. DP11941 The Fallacy of the Fiscal Theory of the Price Level - Once More. 2017.
|
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