The Fiscal Theory of the Price Level and Asset Pricing

The fiscal theory of the price level states that inflation results from more government debt than people believe will be repaid. In his remarks to the IIEA, Dr Cochrane explains the idea, and uses it to understand the surge of inflation in 2021-2022, why that inflation went away without restrictive monetary policy and a recession, the strange quiet of the zero bound era, and the rise and fall during the 1970s and 1980s. Dr Cochrane also discusses his new book, The Fiscal Theory of Price Level. About the Speaker: John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow of the Hoover Institution at Stanford University. His publications include the book The Fiscal Theory of the Price Level and Asset Pricing. He has written articles on monetary policy, inflation, asset markets, macroeconomics, health insurance, time-series econometrics, financial regulation, and other topics. He writes Op-eds in the Wall Street Journal, blogs as “the Grumpy Economist”, and is part of the Hoover Goodfellows podcast with H.R. McMaster and Niall Ferguson.