Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10478777 | Journal of Monetary Economics | 2005 | 28 Pages |
Abstract
The fiscal theory determines the price level from the value of nominal government debt as a claim to government primary surpluses, just as private stock is valued as a claim to corporate profits. Valuation equations are not constraints, so this theory does not mistreat the government's intertemporal budget constraint. I anchor the analysis in a simple cash in advance model. When money demand falls to zero, I show that the price level can still be determined by the government debt valuation equation.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
John H. Cochrane,