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Seigniorage as a Tax: A Quantitative Evaluation

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  • Imrohoruglu, Ayse
  • Prescott, Edward C

Abstract

In this paper we analyze the efficacy of seignorage as a tax associated with various monetary arrangements in a computable general equilibrium model. For the economies examined, we find that seignorage tax is not a good one relative to a tax on labor income. If the after-tax real return is ?5 percent, as it was in the 1974?1978 period, welfare is approximately 0.5 percent of consumption lower than it would be if the after-tax return were zero.
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Suggested Citation

  • Imrohoruglu, Ayse & Prescott, Edward C, 1991. "Seigniorage as a Tax: A Quantitative Evaluation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(3), pages 462-475, August.
    • Handle: RePEc:mcb:jmoncb:v:23:y:1991:i:3:p:462-75
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    1. Andreas Hornstein & Edward C. Prescott, 1989. "The firm and the plant in general equilibrium theory," Staff Report 126, Federal Reserve Bank of Minneapolis.
    2. Lucas, Robert E, Jr, 1980. "Equilibrium in a Pure Currency Economy," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 203-220, April.
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    5. Hansen, Gary D., 1985. "Indivisible labor and the business cycle," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 309-327, November.
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