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Tuesday, July 14, 2020 | History

2 edition of Is the price level determined by the needs of fiscal solvency? found in the catalog.

Is the price level determined by the needs of fiscal solvency?

Matthew B. Canzoneri

Is the price level determined by the needs of fiscal solvency?

by Matthew B. Canzoneri

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  • 1 Currently reading

Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

    Subjects:
  • Prices -- United States -- Econometric models.,
  • Monetary policy -- United States -- Econometric models.,
  • Money supply -- United States -- Econometric models.,
  • Demand for money -- United States -- Econometric models.,
  • Debts, Public -- United States -- Econometric models.

  • Edition Notes

    StatementMatthew B. Canzoneri, Robert E. Cumby, Behzad T. Diba.
    SeriesNBER working paper series -- working paper 6471, Working paper series (National Bureau of Economic Research) -- working paper no. 6471.
    ContributionsCumby, Robert., Diba, Behzad., National Bureau of Economic Research.
    The Physical Object
    Pagination19, [17] p. :
    Number of Pages19
    ID Numbers
    Open LibraryOL22403530M

    Canzoneri, Mathew; Cumby, Robert and Diba, Behzad (), Is the Price Level Determined by the Needs of Fiscal Solvency? American Economic Review, 9 (5), pp Christiano, Lawrence and Fitzgerald, Terry (), Understanding the Fiscal Theory of the Price Level, National Bureau of Economic Research (Cambridge, MA) Working Paper No.   Abstract. This paper aims to test some implications of the Fiscal theory of the price level (FTPL). We develop a model similar to Leeper () and Woodford (), but extended so to generate real effects of fiscal policy also in the Ricardian regime, via an OLG demographic structure.

    Some smaller commodity-exporting economies will need to take steps to increase their fiscal solvency. With rising inflation – albeit from a low level – and potentially more volatile capital flows, the report says policy makers in much of the region should consider adjusting their accommodative monetary policies. fiscal and monetary authorities. The fiscal theory of the price level implies that a government could exogenously fix its real spending, revenue and seigniorage plans, and that the general price level would adjust the real value of its contractual nominal debt obligations so as to ensure government solvency.

    With the fiscal theory of the price level (FTPL), Leeper-Sims-Woodford (LSW) argued that the government budget constraint plays a key role in determining the price level. Indeed, there could even be a dispute vis-a-vis the role of monetary policy in the formation of the price level. The FTPL can determine the price of phlogiston – it can determine an equilibrium price without an associated quantity. Anomaly 4. The FTPL makes as much sense as the HTPL or the ‘Mr Jones Theory of the Price Level’. Anomaly 5. When the equilibrium bond pricing equation is specified correctly – with the government bond.


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Is the price level determined by the needs of fiscal solvency? by Matthew B. Canzoneri Download PDF EPUB FB2

Ricardian regime, fiscal policy – not monetary policy – provides the nominal anchor. Alternatively, in a Ricardian regime, primary surpluses are expected to respond to debt in a way that assures fiscal solvency, and the price level is determined.

The fiscal theory says that the price level is determined by the ratio of nominal debt to the present value of real primary surpluses. I analyze long-term debt and optimal policy in the fiscal. Is the Price Level Determined by the Needs of Fiscal Solvency.

Matthew B. Canzoneri, Robert E. Cumby, Behzad T. Diba. NBER Working Paper No. Issued in March NBER Program(s):Monetary Economics Program A new theory of price determination suggests that if primary surpluses are independent of the level of debt, the price level has to jump' to assure fiscal by: Is the Price Level Determined by the Needs of Fiscal Solvency.

By MATTHEW B. CANZONERI,ROBERT E. CUMBY, AND BEHZAD T. DIBA* The fiscal theory of price determination suggests that if primary surpluses evolve independently of government debt, the equilibrium price level “jumps” to assure fiscal solvency.

Canzoneri, Matthew B. and Cumby, Robert E. and Diba, Bezhad, Is the Price Level Determined by the Needs of Fiscal Solvency. (March ). NBER Cited by:   Is the Price Level Determined by the Needs of Fiscal Solvency.

Is the Price Level Determined by the Needs of Fiscal Solvency. Canzoneri, Matthew B; Cumby, Robert E; Diba, Behzad T By MATTHEW B.

CANZONERI, ROBERT E. CUMBY, BEHZAD T. DIBA* The ï¬ scal theory of price determation suggests that if primary surpluses evolve dependently of government debt, the equilibrium price.

In this regime (which we call fiscal dominant), monetary policy has to work through seignorage to control the price level.

If, on the other hand, primary surpluses are expected to respond to the level of debt in a way that assures fiscal solvency (a regime we call money dominant), then the price level is determined in more conventional ways.

Is the Price Level Determined by the Needs of Fiscal Solvency. by Matthew B. Canzoneri, Robert E. Cumby and Behzad T. Diba. Published in vol issue 5, pages of American Economic Review, DecemberAbstract: The fiscal theory of price determination suggests that if primary surplus.

In this regime (which we call Fiscal Dominant), monetary policy has to work through seignorage to control the price level. If on the other hand primary surpluses are expected to respond to the level of debt in a way that assures fiscal solvency (a regime we call Money Dominant), then the price level is determined in more conventional ways.

Christiano and Fitzgerald: w Understanding the Fiscal Theory of the Price Level: Gordon and Leeper: w The Price Level, the Quantity Theory of Money, and the Fiscal Theory of the Price Level: Canzoneri, Cumby, and Diba: w Is the Price Level Determined by the Needs of Fiscal Solvency?: Buiter: w The Young Person's Guide to Neutrality, Price Level.

Get this from a library. Is the price level determined by the needs of fiscal solvency?. [Matthew B Canzoneri; Robert Cumby; Behzad Diba; National Bureau of Economic Research.]. In this non-Ricardian regime, fiscal policy--not monetary policy--provides the nominal anchor.

Alternatively, in a Ricardian regime, primary surpluses are expected to respond to debt in a way that assures fiscal solvency, and the price level is determined in conventional ways. Fiscal solvency and price level determination in a monetary unionq Paul R. Bergin* Department of Economics, University of California, Davis, CAUSA The"scal theory suggeststhat theprice level is determined by the needto set a real value for nominal household wealth that is consistent with equilibrium.

Get this from a library. Is the price level determined by the needs of fiscal solvency?. [Matthew B Canzoneri; Robert Cumby; Behzad Diba; National Bureau of Economic Research.] -- Abstract: A new theory of price determination suggests that if primary surpluses are independent of the level of debt, the price level has to jump' to assure fiscal solvency.

1. Introduction. Recent literature on price level determination has emphasized the role of fiscal policy. A fiscal theory of the price level has been developed in Leeper (), Sims () and Woodford,Woodford,and this has been extended to various international contexts in Neumeyer and Yano (), Woodford (), Dupor (), and Sims ().

Is the Price Level Determined by the Needs of Fiscal Solvency. By MATTHEW B. CANZONERI, ROBERT E. CUMBY, AND BEHZAD T. DIBA* The fiscal theory of price determination suggests that if primary surpluses evolve independently of government debt, the equilibrium price level "jumps" to assure fiscal solvency.

Is the price level determined by the needs of fiscal solvency. American Economic Rev ] to European data. Second, we use structural balance data, in order to overcome Cochrane's critique. Abstract. The fiscal theory of the price level (FTPL) describes policy rules such that the price level is determined by government debt and the present and future tax and spending plans, with no direct reference to monetary policy.

Abstract. The fiscal theory of the price level (FTPL) describes fiscal and monetary policy rules such that the price level is determined by government debt and fiscal policy alone, with monetary policy playing at best an indirect role.

Fiscal Solvency and Price Level Determination in a Monetary Union Paul R. Bergin* University of California, Davis November Abstract: This paper applies the fiscal theory of price level determination to the case of a monetary union.

A fiscal perspective suggests, first, that the focus of past studies on seigniorage, per se, may be misplaced. Canzoneri, M.

B., R. E. Cumby, and B. T. Diba (). Is the price level determined by the needs of fiscal solvency? Cato, L. A.

and M. E. Terrones (). Fiscal deficits and inflation. Journal of Monetary Economics 52(3), – Cobham, D. (). A comprehensive classification of monetary policy frameworks for advanced and emerging.fiscal theory of the price level can determine the price of money in a model without money, that is, in a world where money does not exist as a physical commodity or.This paper considers whether monetary and scal policy may sensibly be formulated independently of one another, and argues that the reasons for the two to be interconnected go well beyond the familiar but unappealing possibility of using seignorage as a source of revenue for the government.

Particular attention is given to the eects of scal policy upon the price level .