The Fragility of the Fiscal Theory of Price Determination

Gaetano Bloise

No 02-07, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: The fiscal theory of price determination asserts that the price level is determined by the ratio of nominal public debt to the present value of real primary surpluses. To show its fragility, we describe a cash-in-advance economy with in…nitely lived real productive assets. The fiscal theory does not hold since speculative bubbles partly restore the classical indeterminacy result.

Keywords: Money; bubbles; indeterminacy; monetary policy; …scal policy (search for similar items in EconPapers)
JEL-codes: D50 E40 E50 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: The fragility of the fiscal theory of price determination (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:eve:wpaper:02-07

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