TY  - JOUR
AU  - Cukierman,Alex
AU  - Edwards,Sebastian
AU  - Tabellini,Guido
TI  - Seigniorage and Political Instability
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3199
PY  - 1989
Y2  - December 1989
UR  - http://www.nber.org/papers/w3199
L1  - http://www.nber.org/papers/w3199.pdf
N1  - Author contact info:
Alex Cukierman
Tel-Aviv University
School of Economics
Tel-Aviv 69978
ISRAEL
E-Mail: alexcuk@post.tau.ac.il

Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu

Guido Tabellini
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
Italy
Tel: 39 2 583 6 3305; fax 3302
E-Mail: guido.tabellini@unibocconi.it
AB  - The importance of seignorage relative to other sources of government revenue differs markedly across countries. The main theoretical implication of this paper is that countries with more unstable and polarized political systems rely more heavily on seignorage. This result is obtained within the context of a political model of tax reform. The model implies that the more unstable and polarized the political system, the more inefficient is the equilibrium tax structure (in the sense that tax collection is more costly to administer), and the higher therefore, the reliance on seignorage. This prediction of the model is tested on cross-section data for 79 countries. It is found that, after controlling for other variables, political instability significantly contributes to explain the fraction of government revenue derived from seignorage. This finding is very robust. We also find that seignorage is positively related to political polarization, even though here the evidence is weaker because of difficulties in measuring polarization. 
ER  -