Préférence pour la liquidité, effet de richesse et théorie budgétaire du niveau des prix (Liquidity preference, the real wealth effect and the fiscal theory of the price level) (in French with English summary)
Though the promoters of the fiscal theory of the price level consider it as a counterrevolution to the Quantity theory, by demonstrating that price determination is also fiscally driven, we show that the standard framework they use is relevant only when public debt is monetised in the long run. The distinction with the Quantity theory is thus very thin. We propose to modify this framework by applying Keynes liquidity preference theory to public debt holdings. We hence deny money its role as a store of value. Finally, we develop the conditions under which the fiscal theory holds.
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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number
2001-06.
Length: Date of creation: 2001 Date of revision: Publication status: published in Economies et Sociétés, tome XXXVI, no.2, série " Monnaie ", ME, no.4, February 2002. Handle: RePEc:fce:doctra:0106
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Find related papers by JEL classification: E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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