TY  - JOUR
AU  - Woodford,Michael
TI  - Price Level Determinacy Without Control of a Monetary Aggregate
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5204
PY  - 1995
Y2  - August 1995
UR  - http://www.nber.org/papers/w5204
L1  - http://www.nber.org/papers/w5204.pdf
N1  - Author contact info:
Michael Woodford
Department of Economics
Columbia University
420 W. 118th Street
New York, NY 10027
Tel: 212/854-1094
Fax: 212-854-8059
E-Mail: mw2230@columbia.edu
AB  - It is shown that the price level remains determinate even in the case of two kinds of radical money supply endogeneity -- an interest rate peg by the central bank, and a 'free banking' regime -- that are commonly supposed to imply loss of control of the price level.  Price level determination under such regimes can be understood in terms of a 'fiscal theory of the price level,' according to which the equilibrium price level is that level that makes the real value of nominally denominated government liabilities equal to the present value of expected future government budget surpluses.  The application of the fiscal theory of the price level to exogenous-money regimes is sketched as well.
ER  -