Indeterminacy, Bubbles, and the Fiscal Theory of Price Level Determination

Bennett McCallum

No 6456, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The recently-developed fiscal theory of price level determination contends that there is an important class of policy rules in which there exists a unique rational expectations solution that shows the price level to be dependent upon fiscal policy and independent of monetary variables. The present paper argues, however, that there is an alternative solution to these models that has entirely traditional (or monetarist') properties. This latter solution is perhaps the more plausible since it is the solution that is typically regarded as the bubble-free fundamentals' solution. The argument involves a respecification of feasible instrument variables.

JEL-codes: E5 E6 (search for similar items in EconPapers)
Date: 1998-03
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published as Journal of Monetary Economics, Vol. 47, no. 1 (February 2001): 19-30

Downloads: (external link)
http://www.nber.org/papers/w6456.pdf (application/pdf)

Related works:
Journal Article: Indeterminacy, bubbles, and the fiscal theory of price level determination (2001)
Working Paper: Indeterminacy, Bubbles, and the Fiscal Theory of Price Level Determination
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:6456

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6456

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().