The “Fiscal Theory of the Price Level” (FTPL) is rooted in neoclassical economics and provides a contemporary perspective on monetary and inflation puzzles. In contrast to classical quantity theory of money and New Keynesian theories, FTPL posits that prices and inflation are influenced not solely by money or monetary factors, but rather by the fiscal support behind government liabilities as a whole. This framework sheds light on the reasons behind the surge in inflation resulting from fiscal stimulus during the recent pandemic crisis, while the decade-long Federal Reserve quantitative easing (QE) policy since 2008 had a relatively limited impact on inflation.
Ge Qi.
Based on Fiscal Theory to Research the Causes and Future of US Inflation after COVID-19 Pandemic[J]. Studies of International Finance, 2023(6): 38-46
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