Working Papers
A Network Approach to Geopolitics
Economics Working Paper 26127
October 16, 2026
Published September 14, 2022
Traditional economic theory would have the Federal Reserve raise interest rates to lower inflation, which is likely to prompt a recession. However, John Cochrane explains, application of the fiscal theory of inflation may be able to reduce inflation without causing a recession. Cochrane also discusses whether inflation works as a stable or unstable system.
Discussion Questions:
- Why does the interest rate affect inflation?
- How does the fiscal theory of inflation differ from the monetary theory?
Additional Resources:
- Read “Fiscal Histories,” by John Cochrane. Available here.
- Listen to “What ‘Is’ Is: John Cochrane on Recessions, Inflation, the Fed, Debt and ‘Green Pork,’” with Bill Whalen and John Cochrane. Available here.
- Read “Inflation and Monetary Policy,” via Policy Insights by PolicyEd. Available here.
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