Eric Leeper on the Interactions of Fiscal and Monetary Policy

Eric Leeper is a professor of economics at the University of Virginia, an advisor to the Swedish and German central banks and a former Fed economist. Eric has written widely on the links between monetary policy and fiscal policy and joins David on Macro Musings to discuss these links and their implication for the price level. Specifically, Eric and David discuss the relationship between fiscal authorities and monetary authorities as it relates to fiscal dominance and monetary dominance, how the fiscal theory of the price level (FTPL) enhances our understanding of these relationships, how the FTLP can be applied to contemporary economies, what our expectations of fiscal policy should be moving forward, and much more.   Transcript for the episode can be found here.   Eric’s UVA profile: https://economics.virginia.edu/people/profile/eml3jf Eric’s NBER archive: https://www.nber.org/people/eric_leeper?page=1&perPage=50   Related Links:   *Some Unpleasant Monetarist Arithmetic* by Neil Wallace and Thomas J. Sargent https://www.minneapolisfed.org/research/quarterly-review/some-unpleasant-monetarist-arithmetic   *Equilibria under 'Active' and 'Passive' Monetary and Fiscal Policies* by Eric M. Leeper https://www.researchgate.net/publication/4907434_Equilibria_Under_'Active'_and_'Passive'_Monetary_Policies   *Monetary Science, Fiscal Alchemy* by Eric M. Leeper https://www.nber.org/papers/w16510   *The Fiscal Theory of Price Level with a Bubble* by Markus K. Brunnermeier, Sebastian A. Merkel, and Yuliy Sannikov https://www.nber.org/papers/w27116   *Liquidity Premiums on Government Debt and the Fiscal Theory of the Price Level* by Aleksander Berentsen and Christopher J. Waller https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2943241   David’s Twitter: @DavidBeckworth David’s blog: http://macromarketmusings.blogspot.com/