BUDGET, MONEY AND PRICES: A SURVEY

This paper surveys the empirical literature on the link between the financing needs of the Treasury and monetary growth and inflation. The first conclusion is that the evidence in favour of the link is sensitive to the selection of the econometric method. In some works, the lack of fiscal dominance might simply reflect the non use of dynamic methods of estimation able to capture a delayed monetary response to deficits. Secondly, the survey shows how results depend significantly on the period under examination, making it convenient to consider breaks when dealing with long-term studies. Finally, the influence of fiscal policy on monetary policy is evident when works focus on samples of non developed countries.