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Seigniorage Revenue and Inflation Tax in Turkish economy

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  • doğru, bülent

Abstract

The goal of this study is to test the implication of optimal seigniorage theory that in the long run higher tax rates are associated with higher inflation rates and higher nominal interest rates. For this purpose, we examine the long run relationship between nominal interest rates, inflation and tax revenue using time series dataset for Turkish Economy for the period 1980-2011. We estimate the Mankiw’s (1987) optimal seigniorage model for Turkish Economy with the cointegration and vector error correction methods (VECM). According to econometric result, in long run there is a causality relationship from inflation and tax revenue to nominal interest rates. However, in short run we could not find any evidence that support a causality from inflation and tax revenue to nominal interest rates.

Suggested Citation

  • doğru, bülent, 2013. "Seigniorage Revenue and Inflation Tax in Turkish economy," MPRA Paper 45538, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:45538
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    References listed on IDEAS

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    More about this item

    Keywords

    Seigniorage; Inflation Tax; Turkish Economy; Error Correction Model; Cointegration Analysis.;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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