NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Bennett T. McCallum

NBER Working Paper No. 6456
Issued in March 1998
NBER Program(s):   EFG   ME

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.

download in pdf format
   (532 K)

email paper

This paper is available as PDF (532 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6456

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

Users who downloaded this paper also downloaded these:
Buiter w7302 The Fallacy of the Fiscal Theory of the Price Level
Christiano and Fitzgerald w7668 Understanding the Fiscal Theory of the Price Level
McCallum w0559 Price Level Determinacy with an Interest Rate Policy Rule and Rational Expectations
Woodford w5204 Price Level Determinacy Without Control of a Monetary Aggregate
McCallum w9961 Is the Fiscal Theory of the Price Level Learnable?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us