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Is the Fiscal Theory of the Price Level Learnable? / Bennett T. McCallum.
- Format:
- Book
- Author/Creator:
- McCallum, Bennett T.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w9961.
- NBER working paper series no. w9961
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2003.
- Summary:
- This paper presents a prototype model for development of the fiscal theory of the price level.' In this simple setting, the fiscal theory's distinctiveness relies upon adoption of a bubble solution, rather than the rational-expectations fundamentals solution. The paper then shows that the fiscal solution is not adaptively learnable, by agents who estimate coefficients relevant for forecasting on the basis of available data, whereas the orthodox monetarist' solution exists and is learnable. Finally, it is argued that similar results should be expected to apply in models that are more general in various dimensions.
- Notes:
- Print version record
- September 2003.
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