Peter Stella on the Fiscal Theory of the Price Level
Macro Musings with David Beckworth
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The Fiscal Theory of the Price Level
The old theory can it's well how would you define the fiscal theory of the price level for our listeners so I would say that coming back to the quantity theory. The state is issuing liabilities without and this is the part where the fiscal theory stresses without any change in fiscal policy right? So if the company issues more debt but just burns the money away it doesn't generate in a project that generates the revenue to pay off that debt you're going to see the value of the firm fall.
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