Book contents
- Central Banks as Fiscal Players
- Federico Caffè Lectures
- Central Banks as Fiscal Players
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- 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
- References
- Index
1 - The Central Bank Balance Sheet: Why It Matters
Published online by Cambridge University Press: 02 November 2020
- Central Banks as Fiscal Players
- Federico Caffè Lectures
- Central Banks as Fiscal Players
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- 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
- References
- Index
Summary
Chapter 1 starts with a brief overview of the facts about the advanced economy central bank balance sheet explosion since the Great Financial Crisis. The increase in profit remittances by the Fed to the US Treasury during the post-GFC years of extraordinarily low policy rates stands out. The Chapter then delves into the analytics of seigniorage arithmetic and how seigniorage revenues can boost fiscal space. Away from the ELB, the real value of the seigniorage (as a share of GDP) that can be extracted at a target rate of inflation of, say, 2 percent is rather small – typically well under 0.5% of GDP for most advanced economies. At the ELB, however, seigniorage can be truly massive.
- Type
- Chapter
- Information
- Central Banks as Fiscal PlayersThe Drivers of Fiscal and Monetary Policy Space, pp. 10 - 33Publisher: Cambridge University PressPrint publication year: 2020