Political-Economic Analysis of the Interactions between Fiscal and Monetary Policy and their Consequences

2015 Fiscal Year Final Research Report

• Project/Area Number: 25380373
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Public finance/Public economy
• Research Institution: Waseda University
• Principal Investigator: Konishi Hideki 早稲田大学, 政治経済学術院, 教授 (50225471)
• Project Period (FY): 2013-04-01 – 2016-03-31
• Keywords: デフレーション / 財政金融政策 / 政治経済学

Outline of Final Research Achievements

Based on the Fiscal Theory of the Price Level (FTPL), which states that the price level is determined through interactions between fiscal and monetary policy, this research analyzed the issue of why the price level in Japan does not appear to increase in spite of the BOJ's unprecedented quantity-easing monetary policy. For the analysis, this research set up a dynamic model of overlapping generations, departing from the traditional framework of the FTPL, and focused on the political conflicts between generations through the issuance of public debt. It then revealed that aging can be a source of the sluggish movements of the price level and that the inflationary impact of the quantity-easing monetary policy is eliminated by the fiscal policy that tends to postpone repaying debts to the future.

Free Research Field

公共経済学