Fiscal Revenue, Inflationary Finance and Growth /

This paper analyzes the optimal rate of monetary expansion when government resorts to inflationary finance to generate additional investment for enhancing growth. If there are lags in tax collection, an increase in inflation erodes real fiscal revenue, thereby worsening the current balance while red...

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Autor principal: Choudhry, Nurun
Format: Revista
Idioma:English
Publicat: Washington, D.C. : International Monetary Fund, 1992.
Col·lecció:IMF Working Papers; Working Paper ; No. 1992/023
Accés en línia:Full text available on IMF
Descripció
Sumari:This paper analyzes the optimal rate of monetary expansion when government resorts to inflationary finance to generate additional investment for enhancing growth. If there are lags in tax collection, an increase in inflation erodes real fiscal revenue, thereby worsening the current balance while reducing government investment. This impedes capital accumulation as well as increases the welfare cost of inflation. As such, the optimal rate of monetary expansion, equilibrium capital-labor ratio and output are lower while the marginal cost of inflationary finance is higher than they would be without collection lags. Simulations are performed to highlight empirical implications.
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Descripció física:1 online resource (30 pages)
Format:Mode of access: Internet
ISSN:1018-5941
Accés:Electronic access restricted to authorized BRAC University faculty, staff and students