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Disturbing the fiscal theory of the price level: Can it fit the eu-15?

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Author Info
António Afonso () (Universidade Técnica de Lisboa)

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Abstract

With the fiscal theory of the price level (FTPL), Leeper-Sims-Woodford (LSW) argued that the government budget constraint plays a key role in determining the price level. Indeed, there could even be a dispute vis-à-vis the role of monetary policy in the formation of the price level. Apart from several theoretical criticisms, also addressed in the discussion given in this paper, the attempts to validate empirically the novel theory are, so far, rather sparse. Therefore, one of the purposes of this paper is to tentatively assess the possible empirical evidence, concerning the FTPL, for the EU-15 countries.

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Paper provided by International Conferences on Panel Data in its series 10th International Conference on Panel Data, Berlin, July 5-6, 2002 with number B4-3.

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Date of creation: Mar 2002
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Handle: RePEc:cpd:pd2002:b4-3

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Related research
Keywords: Fiscal theory of the price level; fiscal policy; EU-15; panel data models;

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Philipp C. Rother, 2004. "Fiscal policy and inflation volatility," Working Paper Series 317, European Central Bank. [Downloadable!]
  2. Kilian Bizer & Zulia Gubaydullina & Hazim Rahahleh & Werner Sesselmeier, 2007. "FTPL-Perspective on Tradable Deficit Permits in the EMU," Atlantic Economic Journal, International Atlantic Economic Society, vol. 35(3), pages 259-267, September. [Downloadable!] (restricted)
  3. Andreas Thams, 2006. "Fiscal Policy Effects in the European Union," SFB 649 Discussion Papers SFB649DP2006-016, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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