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Revenue-maximizing monetary policy

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Abstract

In this paper, we examine the impact that changes in the rate of money creation and reserve requirements have on real seigniorage revenue. We consider two additional features that differ from previous analyses. First, the model economies grow endogenously, and that growth depends on the accumulation of intermediated capital. Second, agents have two means of financing; one is bank deposits against which reserves must be held and the other is a nonbank intermediary. Thus, growth-rate effects and financing-substitution effects are both present, and one can assess the quantitiative importance or each factor.

Suggested Citation

  • Joseph H. Haslag & Eric Young, 1998. "Revenue-maximizing monetary policy," Working Papers 9801, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:98-01
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    1. is not listed on IDEAS
    2. Juin-Jen Chang & Wen-Ya Chang & Ching-Chong Lai & Ping Wang, 2007. "Equilibrium Dynamics in an Endogenous Growth Model of Money and Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(7), pages 1683-1710, October.
    3. Bittencourt, Manoel & Gupta, Rangan & Makena, Philton & Stander, Lardo, 2022. "Socio-political instability and growth dynamics," Economic Systems, Elsevier, vol. 46(4).
    4. Rangan Gupta & Emmanuel Ziramba, 2008. "Costly Tax Enforcement and Financial Repression," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 37(2), pages 141-154, July.
    5. Gupta, Rangan & Stander, Lardo, 2018. "Endogenous fluctuations in an endogenous growth model: An analysis of inflation targeting as a policy," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 1-8.
    6. Rangan Gupta, 2011. "Currency Substitution and Financial Repression," International Economic Journal, Taylor & Francis Journals, vol. 25(1), pages 47-61.
    7. Rangan Gupta, 2005. "Financial Liberalization and Inflationary Dynamics," Working papers 2005-31, University of Connecticut, Department of Economics.
    8. Gupta, Rangan, 2008. "Tax evasion and financial repression," Journal of Economics and Business, Elsevier, vol. 60(6), pages 517-535.
    9. repec:rza:wpaper:070 is not listed on IDEAS
    10. Rangan Gupta & Lardo Stander, 2014. "Endogenous Fluctuations in an Endogenous Growth Model with Inflation Targeting," Working Papers 201432, University of Pretoria, Department of Economics.
    11. Rangan Gupta, 2005. "A Generic Model of Financial Repression," Working papers 2005-20, University of Connecticut, Department of Economics, revised Jul 2005.
    12. repec:rza:wpaper:099 is not listed on IDEAS
    13. Marcelo Bianconi & Joe Akira Yoshino, 2015. "Firm value, investment and monetary policy," International Journal of Accounting and Finance, Inderscience Enterprises Ltd, vol. 5(3), pages 262-289.
    14. Joydeep Bhattacharya & Joseph H. Haslag, 1999. "Central bank responsibility, seigniorage, and welfare," Working Papers 9909, Federal Reserve Bank of Dallas.
    15. Basu, Parantap, 2001. "Reserve Ratio, Seigniorage and Growth," Journal of Macroeconomics, Elsevier, vol. 23(3), pages 397-416, July.
    16. repec:ipg:wpaper:2014-461 is not listed on IDEAS
    17. Rangan Gupta & Emmanuel Ziramba, 2010. "Optimal public policy with endogenous mortality," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(3), pages 241-249.
    18. Ghossoub, Edgar A., 2023. "Economic growth, inflation, and banking sector competition," Economic Modelling, Elsevier, vol. 129(C).
    19. Heon Lee, 2021. "Money Creation and Banking: Theory and Evidence," Papers 2109.15096, arXiv.org, revised Jun 2024.
    20. Lange, Carsten & Sauer, Christine, 2005. "Dollarization in Latin America: seigniorage costs and policy implications," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(4-5), pages 662-679, September.
    21. Joseph H. Haslag, 1999. "Has monetary policy become less effective?," Working Papers 9906, Federal Reserve Bank of Dallas.

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    Keywords

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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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