The Fiscal Theory of the Price Level as an Alternative Macroeconomic Framework: Revisiting the Conditions for Identifying Monetary and Fiscal Policy

This article defines key terms related to the topic of this study (fiscal theory of the price level, monetary policy, and fiscal policy). It also substantiates the relevance of studying the fiscal theory of the price level as an alternative macroeconomic framework through the lens of revisiting the conditions for identifying monetary and fiscal policy. This article examines the system of joint activities between the Government of the Russian Federation and the Central Bank, initiated by the President to ensure stable economic growth and mitigate the consequences of rising inflation, which is consistent with the fiscal theory of the price level. It describes M. Friedman’s theory, as well as the concepts of T. Sargent and N. Wallace, which address issues of fiscal or monetary dominance in certain socioeconomic circumstances. Models of fiscal and monetary interaction are evaluated, leading to the conclusion that monetary dominance is the most optimal.