The fiscal theory of the price level in a world of low interest rates
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- dc.contributor.author Bassetto, Marcoca
- dc.contributor.author Cui, Wei, 1970-ca
- dc.date.accessioned 2018-09-27T09:51:24Z
- dc.date.available 2018-09-27T09:51:24Z
- dc.date.issued 2018-05
- dc.description.abstract A central equation for the fiscal theory of the price level (FTPL) is the government budget constraint (or "government valuation equation"), which equates the real value of government debt to the present value of fiscal surpluses. In the past decade, the governments of most developed economies have paid very low interest rates, and there are many other periods in the past in which this has been the case. In this paper, we revisit the implications of the FTPL in a world where the rate of return on government debt may be below the growth rate of the economy, considering different sources for the low returns: dynamic inefficiency, the liquidity premium of government debt, or its favourable risk profile.ca
- dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
- dc.format.mimetype application/pdfca
- dc.identifier.uri http://hdl.handle.net/10230/35520
- dc.language.iso engca
- dc.relation.ispartofseries ADEMU Working Paper Series;125
- dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
- dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
- dc.title The fiscal theory of the price level in a world of low interest ratesca
- dc.type info:eu-repo/semantics/workingPaperca