A Game-Theoretic View of the Fiscal Theory of the Price Level

Marco Bassetto

Econometrica, 2002, vol. 70, issue 6, pages 2167-2195

Abstract: The goal of this paper is to probe the validity of the fiscal theory of the price level by modelling explicitly the market structure in which households and the government make their decisions. I describe the economy as a game, and I am thus able to state precisely the consequences of actions that are out of the equilibrium path. I show that there exist government strategies that lead to a version of the fiscal theory, in which the price level is determined by fiscal variables alone. These strategies are however more complex than the simple budgetary rules usually associated with the fiscal theory, and the government budget constraint cannot be merely viewed as an equilibrium condition. Copyright The Econometric Society 2002.

Date: 2002
View citations in EconPapers

Downloads: (external link)
http://www.blackwellpublishing.com/ecta/asp/abstract.asp?iid=6&aid=373&vid=70 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: A Game-Theoretic View of the Fiscal Theory of the Price Level (2000)
Working Paper: A game-theoretic view of the fiscal theory of the price level (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... mb.asp?ref=0012-9682

Access Statistics for this article

Econometrica is edited by Stephen Morris

More articles in Econometrica from Econometric Society
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().