Price level determinacy and monetary policy under a balanced-budget requirement q


This paper analyzes the implications of a balanced-budget "scal policy rule for pricelevel determination in a cash-in-advance economy under three alternative monetary policy regimes. It shows that the price level is indeterminate under a nominal interest rate peg and determinate under a money growth rate peg. Under a feedback rule that sets the nominal… (More)


3 Figures and Tables