Accessible Unlicensed Requires Authentication Published by De Gruyter June 28, 2005

Fiscal Policy and the Price Level

Barbara Annicchiarico and Giancarlo Marini
From the journal Topics in Macroeconomics

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.

Published Online: 2005-6-28

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