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The Evolution of Seigniorage during the Crisis

Author

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  • Clipici Emilia

    (University of Pitesti, Faculty of Economics Science)

Abstract

In developing countries, governments are tempted to, and they often do finance their budget deficits by issuing currency. This leads to inflation, and ultimately, the source of the incomes to the budget are the inflation tax and the seigniorage. The mechanism that is used is the direct loan, from the Treasury (the Government’s cash desk) from the central bank, which means creating a an additional monetary base. Basically, seigniorage is not different from the financing of the budget deficit, by the central bank , by buying government bonds, and the effect of this practice is the emergence if the phenomenon of taxing inflation, by deteriorating the value of the financial assets owned by banks and non-banks. This paper is structured as follows: conceptual aspects concerning the seigniorage in section 1, section 2 showing the models for calculate the level of seigniorage, section 3 estimates the evolution of Seigniorage during the crisis.

Suggested Citation

  • Clipici Emilia, 2012. "The Evolution of Seigniorage during the Crisis," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 1044-1049, Decembre.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:2:p:1044-1049
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    More about this item

    Keywords

    seigniorage; inflation tax; crisis.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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; Modern Monetary Theory
    • G01 - Financial Economics - - General - - - Financial Crises

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