Central Banks as Fiscal Players
The Drivers of Fiscal and Monetary Policy Space

This book develops a unified framework to address a number of key issues in monetary economics and public finance.

Willem Buiter (Author)

9781108842822, Cambridge University Press

Hardback, published 12 November 2020

200 pages
15 x 23 x 1.5 cm, 0.4 kg

'Recommended.' M. H. Lesser, Choice Magazine

It is well known that the balance sheets of most major central banks significantly expanded in the aftermath of the financial crisis of 2007-2011, but the consequences of this expansion are not well understood. This book develops a unified framework to explain how and why central bank balance sheets have expanded and what this shift means for fiscal and monetary policy. Buiter addresses a number of key issues in monetary economics and public finance, including how helicopter money works, when modern monetary theory makes sense, why the Eurosystem has a potentially fatal design flaw, why the fiscal theory of the price level is a fallacy and how to escape from the zero lower bound.

Introduction
1. The central bank balance sheet: why it matters
Appendix to chapter 1: stochastic discount factors
2. A stylized set of accounts for the Treasury, the central bank and the State
3. Helicopter money drops
4. The fallacy of the fiscal theory of the price level – and why it matters
Appendix to chapter 4: a formal approach to the FTPL
5. Life at the zero lower bound and how to escape from it
6. Why the Eurosystem isn't a proper central bank – and how to make it one.

Subject Areas: Monetary economics [KCBM], Macroeconomics [KCB], Economics, finance, business & management [K]