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The Optimal Mix Of Taxes on Money, Consumption and Income

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Listed:
  • Fiorella de Fiore
  • Pedro Teles

Abstract

We show that the Friedman rule is optimal in the standard transactions techology monetary model whether the alternative fiscal instrument is a consumption tax, an income tax, or both, and whether taxes are paid with money or not. These results are at odds with recent literature. We show that an incorrect specification of the transactions technology explains the divergence.

Suggested Citation

  • Fiorella de Fiore & Pedro Teles, 1999. "The Optimal Mix Of Taxes on Money, Consumption and Income," Working Papers w199902, Banco de Portugal, Economics and Research Department.
  • Handle: RePEc:ptu:wpaper:w199902
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    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp199902.pdf
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    Cited by:

    1. Klaeffling, Matt & López Pérez, Víctor, 2003. "Inflation targets and the liquidity trap," Working Paper Series 272, European Central Bank.
    2. De Fiore, Fiorella, 2000. "Can indeterminacy explain the short-run non-neutrality of money?," Working Paper Series 0032, European Central Bank.
    3. De Fiore, Fiorella, 2000. "The optimal inflation tax when taxes are costly to collect," Working Paper Series 0038, European Central Bank.

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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