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- W2155655197 abstract "According to the fiscal theory of the price level (FTPL), the interactions between monetary and fiscalpolicies with governments facing the possibility to act in a non-Ricardian manner make the general pricelevel be fully determined. Here, depending on the expectations framework, we show to what extent thevalidity of the FTPL also depends on consumers being non-Ricardian. With prices driven by rationalexpectations, the qualitative results of the strategic interactions between policies do not depend on theRicardian or non-Ricardian behaviour by the households. With sluggish inflation, the strong version of theFTPL does not bring to a dynamically stable economy. The economy is stable only for a weak version ofthe FTPL; but, this time, stability conditions depend strongly on the existence and size of the wealth effect.If inflation is sluggish, the FTPL is incompatible with Ricardian consumers." @default.
- W2155655197 created "2016-06-24" @default.
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- W2155655197 date "2002-01-01" @default.
- W2155655197 modified "2023-09-27" @default.
- W2155655197 title "The fiscal theory of the price level and sluggish inflation: how important shall the wealth effect be?" @default.
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