A macroeconomic theory of price determination

Kazuyuki Sasakura

Structural Change and Economic Dynamics, 2021, vol. 59, issue C, 214-227

Abstract: Motivated by disputes over the quantity theory of money and the fiscal theory of the price level (the FTPL), I consider price determination in another macro model which can be used both in the short run and in the long run. It is a two-sector model with flexible prices and profit-maximizing firms. Government and the foreign sector are also included. It is assumed that prices are determined by supply and demand in the short run unlike in the quantity theory and the FTPL. In particular the determination of the price of consumption goods is pursued. Finally the FTPL is examined.

Keywords: Price determination; Quantity theory of money; Fiscal theory of the price level; Neoclassical synthesis (search for similar items in EconPapers)
JEL-codes: E12 E13 E31 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:59:y:2021:i:c:p:214-227

DOI: 10.1016/j.strueco.2021.08.008

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