Are countercyclical fiscal policies counterproductive?
In: NBER working paper series 11869
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In: NBER working paper series 11869
In: NBER working paper series 9084
In: Scottish journal of political economy: the journal of the Scottish Economic Society, Band 53, Heft 1, S. 4-27
ISSN: 1467-9485
ABSTRACTThis paper examines price‐level determination from the perspective of portfolio choice. Arbitrages among money balances, bonds, and investment goods determine their relative demands. Returns to real balance holdings and after‐tax returns to investment goods determine the relative values of nominal and real assets. Because expectations of government policies ultimately determine the expected returns to both nominal and real assets, the price level depends on interactions among current and expected future monetary and fiscal policies. The quantity theory and the fiscal theory emerge as special cases produced by restricting both the margins and the policies considered.
In: NBER Working Paper No. w11869
SSRN
In: Journal of political economy, Band 102, Heft 6, S. 1228-1247
ISSN: 1537-534X
In: Journal of political economy, Band 102, Heft 6, S. 1228
ISSN: 0022-3808
In: Journal of Monetary Economics, Band 29, Heft 3, S. 341-369
In: Journal of political economy, Band 91, Heft 4, S. 589-610
ISSN: 1537-534X
In: Journal of Monetary Economics, Band 12, Heft 1, S. 101-121
In: Journal of political economy, Band 91, Heft 4, S. 589-610
ISSN: 0022-3808
World Affairs Online
In: Carnegie Rochester Conference series on public policy: a bi-annual conference proceedings, Band 49, S. 265-304
ISSN: 0167-2231
U.S. velocity of base money exhibits three distinct trends since 1950. After rising steadily for thirty years, it flattens out in the 1980s and falls substantially in the 1990s. This paper explores whether the observed secular movements in velocity can be accounted for exclusively by endogenous responses to changing expectations about monetary and fiscal policy. We use a model with two key features: a substitute for money in transactions and an array of assets that includes money, nominal bonds, and physical capital. The model maps policy expectations into portfolio decisions, making equilibrium velocity a function of expected future money growth, tax rates, and government spending. When expectations are estimated using Bayesian updating, simulated velocity matches the trends in actual velocity surprisingly well.
BASE
In: International organization, Band 62, Heft 2, S. 323-358
ISSN: 0020-8183
World Affairs Online
In: British journal of political science, Band 42, Heft 3, S. 573-597
ISSN: 0007-1234