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Seigniorage As a Tax : A Quantitative Evaluation

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  • Imrohoroglu, A.
  • Prescott, E.C.

Abstract

In this paper we analyze the efficacy of seignorage as a tax associated with various monetary arrangements in a computable general equilibrium model. For the economies examined, we find that seignorage tax is not a good one relative to a tax on labor income. If the after-tax real return is ?5 percent, as it was in the 1974?1978 period, welfare is approximately 0.5 percent of consumption lower than it would be if the after-tax return were zero.
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Suggested Citation

  • Imrohoroglu, A. & Prescott, E.C., 1991. "Seigniorage As a Tax : A Quantitative Evaluation," Papers 91-3, Southern California - School of Business Administration.
    • Handle: RePEc:fth:socabu:91-3
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    References listed on IDEAS

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    1. Fischer, Stanley, 1981. "Towards an understanding of the costs of inflation: II," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 15(1), pages 5-41, January.
    2. Hansen, Gary D., 1985. "Indivisible labor and the business cycle," Journal of Monetary Economics, Elsevier, vol. 16(3), pages 309-327, November.
    3. Rogerson, Richard, 1988. "Indivisible labor, lotteries and equilibrium," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 3-16, January.
    4. Andreas Hornstein & Edward C. Prescott, 1989. "The firm and the plant in general equilibrium theory," Staff Report 126, Federal Reserve Bank of Minneapolis.
    5. Lucas, Robert E, Jr, 1980. "Equilibrium in a Pure Currency Economy," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 203-220, April.
    6. Scheinkman, Jose A & Weiss, Laurence, 1986. "Borrowing Constraints and Aggregate Economic Activity," Econometrica, Econometric Society, vol. 54(1), pages 23-45, January.
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