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Learning the fiscal theory of the price level: Some consequences of debt-management policy

Eusepi, Stefano; Preston, Bruce


This paper examines the consequences of the scale and composition of the public debt in policy regimes in which monetary policy is 'passive' and fiscal policy 'active'. This configuration of policy is argued to be of both historical and contemporary interest, in economies such as the US and Japan. It is shown that higher average levels and moderate average maturities of debt can induce macroeconomic instability for a range of policies specified as simple rules. However, interest-rate pegs...[Show more]

CollectionsANU Research Publications
Date published: 2011
Type: Journal article
Source: Journal of the Japanese and International Economies
DOI: 10.1016/j.jjie.2011.09.003


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