Maximising Seigniorage and Inflation Tax: The Case of Belarus
AbstractWhile most Central European countries, realising the inflationary potential of money creation, had by the mid-1990s switched to market instruments based monetary policy, Belarus continued to use money emission, so gaining seigniorage and inflation tax. The productivity of the inflation tax can be analysed by comparing the revenue actually raised from inflation tax with the revenue that could be raised if the quantity of money had risen at a constant rate. The present paper, based on Cagan’s (1956) seminal work ‘Monetary Dynamics of Hyperinflation’, analyses the effect of inflation on seigniorage revenue in Belarus and draws conclusions about the effectiveness of monetary policy in 1995-2002, and about the consequences of inflationary financing.
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- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
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- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
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- NEP-CBA-2006-03-25 (Central Banking)
- NEP-CIS-2006-03-25 (Confederation of Independent States)
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