Is There a Bubble in Government Debt?

Eric Leeper is a professor of economics at the University of Virginia, an advisor to the Swedish and German central banks and a former Fed economist. Eric has written widely on the links between monetary policy and fiscal policy and joins David on Macro Musings to discuss these links and their implication for the price level. Specifically, Eric and David discuss the relationship between fiscal authorities and monetary authorities as it relates to fiscal dominance and monetary dominance, how the fiscal theory of the price level (FTPL) enhances our understanding of these relationships, how the FTLP can be applied to contemporary economies, what our expectations of fiscal policy should be moving forward, and much more.

Transcript for the episode can be found here.

Eric’s UVA profile: https://economics.virginia.edu/people/profile/eml3jf

Eric’s NBER archive: https://www.nber.org/people/eric_leeper?page=1&perPage=50

Related Links:

*Some Unpleasant Monetarist Arithmetic* by Neil Wallace and Thomas J. Sargent

https://www.minneapolisfed.org/research/quarterly-review/some-unpleasant-monetarist-arithmetic

*Equilibria under 'Active' and 'Passive' Monetary and Fiscal Policies* by Eric M. Leeper

https://www.researchgate.net/publication/4907434_Equilibria_Under_'Active'_and_'Passive'_Monetary_Policies

*Monetary Science, Fiscal Alchemy* by Eric M. Leeper

https://www.nber.org/papers/w16510

*The Fiscal Theory of Price Level with a Bubble* by Markus K. Brunnermeier, Sebastian A. Merkel, and Yuliy Sannikov

https://www.nber.org/papers/w27116

*Liquidity Premiums on Government Debt and the Fiscal Theory of the Price Level* by Aleksander Berentsen and Christopher J. Waller

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2943241

David’s Twitter: @DavidBeckworth

David’s blog: http://macromarketmusings.blogspot.com/