Fiscal Policy and the Price Level

This paper studies the issue of price stability in a continuous time optimizing general equilibrium model with overlapping generations. It is shown that fiscal policy has effects on nominal variables. Fiscal expansions are inflationary even when the government intertemporal budget constraint is respected for any prices sequence and there is no recourse to money financing. Our results shed new light on the interaction between fiscal policy and nominal prices.

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Year of publication:	2005
Authors:	Barbara, Annicchiarico ; Giancarlo, Marini
Published in:	The B.E. Journal of Macroeconomics. - De Gruyter, ISSN 1935-1690. - Vol. 5.2005, 1, p. 1-15
Publisher:	De Gruyter

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008536593