Jim Tobin, who died on March 11, 2002 at the age of 84, was one of giants of economics of the second half of the twentieth century and the greatest macroeconomist of his generation. Tobin's influence on macroeconomic theory is so pervasive - so much part of our professional 'acquis'- that many...

This paper argues that the "fiscal theory of the price level" (FTPL) has feet of clay. The source of the problem is a fundamental "economic" misspecification. The FTPL confuses two key building blocks of a model of a market economy: budget constraints, which must be satisfied identically, and...

Monetary theory and policy are part of intertemporal public finance. The two "ghosts" are the liquidity trap and the real balance effect. The "eccentricities" are negative nominal interest rates and the helicopter drop of money. The "fallacy" is the Fiscal Theory of the Price Level, a logically...

The paper considers two small analytical models, one Old-Keynesian, the other New-Keynesian, possessing equilibria where nominal interest rates at all maturities can be stuck at their zero lower bound. When the authorities remove the zero nominal interest rate floor by adopting an augmented...