The Fiscal Theory of the Price Level av John Cochrane

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<p><b>A comprehensive account of how government deficits and debt drive inflation</b><br><br>Where do inflation and deflation ultimately come from? The fiscal theory of the price level offers a simple 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.<br><br>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