The fiscal theory of the price level puzzle: A non Ricardian view

Jean-Pascal Benassy

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Abstract: The fiscal theory of the price level says that the price level can be made determinate if the government uses fiscal policies such that government liabilities explode unless the price in the first period is at the "right" level. The policy implications are disturbing, as they call for rather adventurous fiscal policies. We show that these disturbing policy implications are specific to the "Ricardian" models that have been used to develop the theory. By moving to "non Ricardian" models we see that price determinacy is consistent with reasonable fiscal policies.

Keywords: global determinacy; monetary policy; fiscal theory of the price level; fiscal policy; théorie fiscale de prix; politique fiscale; détermination globale; politique monétaire (search for similar items in EconPapers)
Date: 2005-12
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590560v1
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Related works:
Journal Article: THE FISCAL THEORY OF THE PRICE LEVEL PUZZLE: A NON-RICARDIAN VIEW (2008)
Working Paper: The fiscal theory of the price level puzzle: A non-Ricardian view (2008)
Working Paper: The fiscal theory of the price level puzzle: A non Ricardian view (2005)
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