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BCRA and Treasury Balance Sheet, and Price Dynamics

Author

Listed:
  • Javier Garcia Cicco

    (Universidad de San Andres)

Abstract

This paper presents a conceptual framework to analyze the potential effects on price dynamics of policies aimed at altering the balance sheet of the Central Bank and/or the Treasury. The foundation of the analysis is the interaction between the intertemporal budget constraints of both entities—that is, the consolidated government constraint. It is argued that, in general terms, changes in the composition of these balance sheets are not expected to have a first-order effect on the price path; in contrast, the expected paths of fiscal and/or monetary policy, or changes in the size of the consolidated government's balance sheet, would. However, there may still be effects (possibly of a smaller order of magnitude, though not necessarily negligible) insofar as the implemented policy imposes restrictions on the expected fiscal and/or monetary paths, or if various premia involved in the valuation of financial assets are affected by the operation. The aim is to clearly lay out the arguments behind these claims.

Suggested Citation

  • Javier Garcia Cicco, 2025. "BCRA and Treasury Balance Sheet, and Price Dynamics," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(86), pages 6-27, November.
    • Handle: RePEc:bcr:ensayo:v:1:y:2025:i:86:p:6-27
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    File URL: https://www.investigacioneseconomicas.bcra.gob.ar/ensayos_economicos_bcra/article/view/684/592
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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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