The Wallace neutrality (also known as Wallace Irrelevance Proposition,Modigliani–Miller theorem for government finance), is an economics proposition asserting thatin certain environment, holding fiscal policy constant, alternative paths of the government financial policies have no effect on the sequences for the price level and for real allocations in the economy. The proposition rests upon a no arbitrage argument similar to that of the Modigliani–Miller theorem. Policy implication is that, whenever Wallace neutrality applies, conventional open-market purchases of securities by the central bank won't be an effective monetary policy.