La théorie budgétaire du niveau des prix : un bilan critique (The Fiscal Theory of the Price Level, a critical assessment) (in French with English summary)

This article presents a survey of the Fiscal Theory of the Price Level. According to it, there are two stable regimes of economic policies: one, traditional, where the monetary authorities control inflation and where the fiscal authorities must be concerned with their intertemporal balance. The other, where the monetary policy is passive and where the fiscal authorities can be non-ricardian, i.e. unconcerned with public debt: the price level adjusts the real debt to the future discounted primary surpluses. The FTPL is presented following its historical developments: from its precursors (Sargent, Begg...) to its recent promoters (Leeper, Woodford); from its theoretical critics (Buiter) to its empirical criticisms. The FTPL is neither consistent with the observed behaviour of monetary authorities, nor with the empirical sluggishness of inflation (this latter result is an original one). However, it highlights the need to analyse the strategic interactions between fiscal and monetary policies.