term 2 - lectures 9-10 fiscal theory of price level Flashcards
what does the Ricardian Regime (Sargent 1982)/Active Monetary Policy and Passive Fiscal Policy Regime (Leeper 1991) assume about the fiscal policy and monetary policy?
what does the fiscal dominance/active fiscal policy and passive monetary policy assume about fiscal policy and monetary policy?
what do the Ricardian Regime (Sargent 1982)/Active Monetary Policy and Passive Fiscal Policy Regime (Leeper 1991) and the fiscal dominance/active fiscal policy and passive monetary policy have in common?
what does the fiscal theory of the price level/ non ricardian policy (sims 1994; woodford 1995;2001b;cochrane 1998a) assume about the price level?
as opposed to the quantity theory of money
what is the real flow budget constraint?
what is the two period intertemporal budget constraint and how is it derived?
what occurs in the two period intertemporal budget constraint if b2=0?
what is the infinite horizon case of the intertemporal budget constraint?
what are ponzi games?
ponzi games are attempts by borrowers to perpetually borrow sufficient new funds to pay back the outstanding debt
what is the equation for govt financing its activities using ponzi games?
what is the transversatility condition?
what condition is allowed adter the ruling out of ponzi games?
what does the intertemporal budget constraint become after ruling out ponzi games?
what does the intertemporal budget constraint and the transversality condition assume about ricardian policy?
what is the intuition behind non ricardian policy and fiscal paths?
what is the quantity theory of money in ricardian policy in modern models?
what does the fisher equation imply about the velocity of money and price level?
how can the quantity theory be rewritten to include forward looking expectations of price level?
waht equations are required to determine the price level in the fiscal theory of the price level?
there may be multiple price levels consistent with the quantity theory, fiscal policy determines which one is the equilibrium price level. given the stock of nominal debt, the equilibrium price level must ensure the real market value of govt debt is equal to the expected present value of primary surplus. basic idea is fiscal factors replace money supply as the key determinant of the price levle
how can the FTPL be used in the analogy of Microsoft?
what is the intution of the fiscal theory of the price level?
what is the framework for the households in the FTPL with constant primary surplus (Christiano and Fitzgerald 2000)
how is the real seignorage written as for the central bank in the FTPL with constant primary surplus (Christiano and Fitzgerald 2000)
how is the real seignorage written as for the central bank when it targets nominal interest rate in the FTPL with constant primary surplus (Christiano and Fitzgerald 2000)
