Report
Can the fiscal theory of the price level be used?
The fiscal theory of the price level assumes that public debt sustainability is achieved by an instantaneous (in reality rapid) rise in the price level, which reduces the real (price-deflated) value of public debt and brings it down to the level of discounted primary fiscal surpluses, i.e. back to the level where it is sustainable. We look at the extent to which this theory can explain the sharp rise in inflation in OECD countries since 2020. The results do not confirm the relevance of this theory : when comparing OECD countries, the primary fiscal deficit between 2020 and 2023 (as a percentage of public debt) is not correlated with the additional inflation recorded between 2020 and 2023.
Provider
Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Other Reports from Natixis
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.