The Optimal Collection of Seigniorage: Theory and Evidence
This paper presents and tests a positive theory of monetary and fiscal policy. The government chooses the rates of taxation and inflation to minimize the present value of the social cost of raising revenue given exogenous expenditure and an intertemporal budget constraint. The theory implies that nominal interest rates and inflation are random walks. It also implies that nominal interest rates and inflation move together with tax rates. United States data from 1952 to 1985 provide some support for the theory.
|Date of creation:||May 1987|
|Date of revision:|
|Publication status:||published as Mankiw, N. Gregory. "The Optimal Collection of Seigniorage: Theory and Evidence," Journal of Monetary Economics, Vol.20, No.2, (September 1987), pp. 327-341.|
|Note:||ME EFG PE|
|Contact details of provider:|| Postal: |
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