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Inflation as a Tax On Money: Integfration Into Is-Lm Analysis

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  • T. Norman Van Cott

    (Ball State University)

Abstract

Inflation acts as a tax on private monetary wealth, thereby enabling the government to command real resources via inflationary monetary issue. Curiously, the inflation tax on money concept has never been integrated into the IS-LM tradition of macroeconomic analysis. This article illustrates how inflation as a tax on money can be dealt with in IS-LM terms. By remedying this long-standing gap in macroeconomics literature, the IS-LM tradition in macroeconomics is more open to discussion of issues related to the inflation tax.

Suggested Citation

  • T. Norman Van Cott, 1981. "Inflation as a Tax On Money: Integfration Into Is-Lm Analysis," Public Finance Review, , vol. 9(1), pages 61-74, January.
    • Handle: RePEc:sae:pubfin:v:9:y:1981:i:1:p:61-74
    DOI: 10.1177/109114218100900105
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    References listed on IDEAS

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    1. Nichols, Donald A, 1974. "Some Principles of Inflationary Finance," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 423-430, Part I, M.
    2. John A. Tatom, 1976. "The welfare cost of inflation," Review, Federal Reserve Bank of St. Louis, vol. 58(Nov), pages 9-22.
    3. Turnovsky,Stephen J., 1977. "Macroeconomic Analysis and Stabilization Policy," Cambridge Books, Cambridge University Press, number 9780521291873, January.
    4. Charlotte E. Ruebling, 1975. "Financing government through monetary expansion and inflation," Review, Federal Reserve Bank of St. Louis, vol. 57(Feb), pages 15-23.
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    Cited by:

    1. T. Van Cott, 2012. "Milton Friedman and the Genesis of Inflation Tax Analysis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(3), pages 315-319, August.

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