The Fiscal Theory of the Price Level

“Provocative … and well timed for an age of big deficits and high inflation.” * The Economist *“Having given the magic money tree a good shake, governments are now grappling with inflation and swollen debts. A more sombre age calls for a more serious approach to economics. John Cochrane’s fiscal theory fits the bill.”—Edward Chancellor, Reuters“The culmination of years of careful research… . [The Fiscal Theory of the Price Level] is not just about predicting the behaviour of the price level, but rather opens a whole new dimension for studying the political and redistributive implications of fiscal policy as expressed through the channel of monetary policy and inflation.”—Michael Ben-Gad, Economic Affairs”[The Fiscal Theory of the Price Level] provides an elegant theoretical framework for both explaining the experiences of the 2010s and why the change in policy regime in the 2020s has led to high inflation and interest rates—and what will be required to return inflation to ‘normal.’”—Melissa Davies, Society of Professional Economists“The Fiscal Theory of the Price Level is a captivating read that prompts a deeper reflection on the influence of fiscal policy… . His thorough analysis of fiscal theory alongside monetarism and new Keynesianism provides an exciting collection of insights that traces the history of inflation to emerging fiscal research.”—Nicole Heroux, Monthly Labor Review

John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution at Stanford University. He was previously a professor of finance at the University of Chicago Booth School of Business. His previous books include Asset Pricing (Princeton).