Growth and Distributional Effects of Inflation with Progressive Taxation
AbstractThis paper examines the growth and income distribution effects of inflation in a growing economy with heterogeneous households and progressive income taxation. Assuming that the cash-in-advance constraint applies to investment as well as to consumption spending, we show that a higher growth of monetary supply yields a negative impact on growth and an ambiguous effect on income distribution. Numerical example with plausible parameter values, however, demonstrate that those long-run effects of inflation tax are rather small. In contrast, fiscal distortion caused by progressive taxation yield significant impacts on growth and distribution
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26113.
Date of creation: 20 Oct 2010
Date of revision:
Inflation Tax; Progressive Income Tax; Growth; Income Distribution;
Other versions of this item:
- Seiya Fujisaki & Kazuo Mino, 2010. "Growth and Distributional Effects of Inflation with Progressive Taxation," Economics Bulletin, AccessEcon, vol. 30(4), pages 3055-3065.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-30 (All new papers)
- NEP-DGE-2010-10-30 (Dynamic General Equilibrium)
- NEP-FDG-2010-10-30 (Financial Development & Growth)
- NEP-MAC-2010-10-30 (Macroeconomics)
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