Government deficits, consumption, and the price level

Barbara Annicchiarico () and Giancarlo Marini

Portuguese Economic Journal, 2005, vol. 4, issue 3, 193-205

Abstract: This paper investigates the dynamics of the price level in a continuous time monetary version of the Yaari-Blanchard overlapping generations model with capital accumulation. It is shown that there is an interaction between fiscal discipline and price stability when the government budget is intertemporally balanced. Relevant implications are that high debt and slow adjustment adversely affect both prices and capital accumulation. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Fiscal deficits; Price stability; Government debt (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/s10258-005-0047-1

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