Price stability: is a tough central bank enough?

Lawrence Christiano and Terry Fitzgerald

Economic Commentary, 2000, issue Aug

Abstract: What is the best way to achieve price stability? Conventional wisdom says that a tough, independent central bank is all that is necessary. However, a new view?the fiscal theory of the price level?argues that an appropriate fiscal policy is also required, no matter how tough the central bank may be. The choice of the fiscal theory versus the conventional view has significant implications for the way central banks do business.

Keywords: Monetary policy; Fiscal policy; Banks and banking, Central (search for similar items in EconPapers)
Date: 2000
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