Inflation, Tariffs and Tax Enforcement Costs
This paper derives the dependency of optimal tariff and inflation tax on tax collection and enforcement costs. The analysis is done for a small, open economy. The existence of such costs can justify tariff and inflation tax policies as optimal revenue-raising devices. This paper suggests that greater government demand for revenue will increase the use of inflation and tariffs as revenue devices. The analysis derives elasticity rules that tie optimal tariff and inflation rates to the costs of tax collection.
|Date of creation:||Oct 1985|
|Date of revision:|
|Publication status:||published as Aizenman, Joshua. "Inflation, Tariffs and Tax Enforcement Costs," Journal of International Economic Integration, Vol. 2, No. 2, pp. 12-28, (Autumn 1987).|
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- Harberger, Arnold C, 1971. "Three Basic Postulates for Applied Welfare Economics: An Interpretive Essay," Journal of Economic Literature, American Economic Association, vol. 9(3), pages 785-97, September.
- Jovanovic, Boyan, 1982. "Inflation and Welfare in the Steady State," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 561-77, June.
- Siegel, Jeremy J., 1978. "Notes on optimal taxation and the optimal rate of inflation," Journal of Monetary Economics, Elsevier, vol. 4(2), pages 297-305, April.
- Joshua Aizenman, 1986.
"On the Complementarity of Commercial Policy, Capital Controls, and Inflation Tax,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 19(1), pages 114-33, February.
- Joshua Aizenman, 1985. "On the Complementarity of Commercial Policy, Capital Controls and Inflation Tax," NBER Working Papers 1583, National Bureau of Economic Research, Inc.
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