From the Publisher
“A treatise on the scale of Keynes, Friedman, and Schwartz, The Fiscal Theory of the Price Level now joins the monuments of monetary economics that every serious researcher in the field must know and consider.”—Darrell Duffie, Stanford University
“Policies that set taxes, spending, debt, and interest rates interact to control inflation. Though it’s labelled the fiscal theory, the approach laid out in Cochrane’s book is not one among many theories of the price level; it is the only theory that confronts all these aspects of monetary and fiscal policy jointly. He develops intuition with simple examples, considers a wide range of realistic complications to the theory, interprets empirical observations, and explores the relevant history of thought. Plus, it’s fun to read.”—Christopher A. Sims, Nobel Laureate in Economics
“This book is the product of years of Cochrane’s groundbreaking research on interrelated topics central to modern macroeconomics and finance. In addition to providing stern but fair criticisms of a vast technical literature, Cochrane shows by example how enlightening good data, econometrics, and economic theory can be when in the right hands.”
—Thomas J. Sargent, Nobel Laureate in Economics“This book provides an exhaustive account of the fiscal theory of the price level and its implications by one of the leading experts on the theory. John Cochrane has developed the theory by incorporating it into more empirically realistic and compelling frameworks, has worked out testable implications to take the theory to the data, and has patiently answered its critics and skeptics. This book couldn’t have appeared at a better time.”—Stephanie Schmitt Grohé, Columbia University
“This is an important book, and its importance will only grow in coming decades. The fiscal theory is the freshest and most relevant development in monetary economics since Sargent and Wallace in the early 1980s, and this book offers a much-needed alternative to the unquestioned dominance of the New Keynesian paradigm.”
—Eric M. Leeper, University of Virginia“This brilliant, provocative book explains in a clear, careful way the elements of the fiscal theory of the price level approach to macroeconomics. Using modern finance theory, modern macroeconomics, and historical narratives, John Cochrane makes a convincing case that fiscal policy, not just monetary policy, is a key underpinning for understanding inflation.”
—Michael D. Bordo, Rutgers University