NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Optimal Collection of Seigniorage: Theory and Evidence

N. Gregory Mankiw

NBER Working Paper No. 2270 (Also Reprint No. r0991)
Issued in May 1987
NBER Program(s):   ME   EFG   PE

This paper presents and tests a positive theory of monetary and fiscal policy. The government chooses the rates of taxation and inflation to minimize the present value of the social cost of raising revenue given exogenous expenditure and an intertemporal budget constraint. The theory implies that nominal interest rates and inflation are random walks. It also implies that nominal interest rates and inflation move together with tax rates. United States data from 1952 to 1985 provide some support for the theory.

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Document Object Identifier (DOI): 10.3386/w2270

Published: Mankiw, N. Gregory. "The Optimal Collection of Seigniorage: Theory and Evidence," Journal of Monetary Economics, Vol.20, No.2, (September 1987), pp. 327-341. citation courtesy of

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