The Fiscal Theory of the Price Level

Princeton: Princeton University Press, 2023. First Printing [Stated]. Hardcover. xxvi, 558, [4] pages. Figures. Formulas, Notation. Tables. Bibliography. Index. The format is approximately 7.25 inches by 10.25 inches. Inscribed by the author on the title page. Inscription reads To Carlos with best wishes John H. Cochrane. John Howland Cochrane (born 26 November 1957) is an American economist specializing in financial economics and macroeconomics. Formerly a professor of economics and finance at the University of Chicago, Cochrane serves full-time as the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution at Stanford University. Cochrane has served as head of the National Bureau of Economic Research asset pricing group, and was the editor of the Journal of Political Economy from 1998 to 2003. He was elected Fellow of the Econometric Society in 2001, served as vice-president of the American Finance Association in 2008, and was elected president of this learned society for the 2010 term. Cochrane is the author of Asset Pricing, a widely used textbook in graduate courses on asset pricing. According to his own words, the organizing principle of the book is that everything can be traced back to specializations of a single equation: the basic pricing equation. Cochrane received the TIAA-CREF Institute Paul A. Samuelson Award for this book. Cochrane has worked on the fiscal theory of the price level, on the debate between permanent and temporary shocks in macroeconomic fluctuations, and the cost of near-rational behavior. Where do inflation and deflation ultimately come from? The fiscal theory of the price level offers an answer: Prices adjust so that the real value of government debt equals the present value of taxes less spending. Inflation breaks out when people don’t expect the government to fully repay its debts. The fiscal theory is well suited to today’s economy: Financial innovation undermines money demand, and central banks don’t control the money supply or aggressively change interest rates, invalidating classic theories, while large debts and deficits threaten inflation and constrain monetary policy. This book presents a comprehensive account of this important theory from one of its leading developers and advocates. John Cochrane aims to make fiscal theory useful as a conceptual framework and modeling tool, and for analyzing history and policy. He merges fiscal theory with standard models in which central banks set interest rates, giving a novel account of monetary policy. He generalizes the theory to explain data and make realistic predictions. For example, inflation decreases in recessions despite deficits because discount rates fall, raising the value of debt; specifying that governments promise to partially repay debt avoids classic puzzles and allows the theory to apply at all times, not just during periods of high inflation. Cochrane offers an extensive rethinking of monetary doctrines and institutions through the eyes of fiscal theory, and analyzes the era of zero interest rates and post-pandemic inflation. Filled with research by Cochrane and others, The Fiscal Theory of the Price Level offers important new insights about fiscal and monetary policy. Condition: Very good / Very good.

Keywords: Monetary Policy, Asset Pricing, Fiscal Theory, Intertemporal Model, Inflation, Balance Sheets, Interest Rate, Keynesian, Fiscal Policy, Central Bank, Discounting, Surplus Processes, Laffer Curve, Bond Price, Quantitative Easing, Taylor Rules, Friedma

ISBN: 9780691242248

[Book #87059]

Price: $175.00

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