Inflation Aversion and the Optimal Inflation Tax

Article, Preprint OPEN
Gaowang Wang; Heng-fu Zou;
(2011)
  • Journal: Annals of Economics and Finance, volume 12, issue 1 May, pages 13-30
  • Subject: Inflation aversion, Optimal inflation tax, Second best taxation, The friedman rule
    • jel: jel:E31 | jel:E41 | jel:E52 | jel:H21
    arxiv: General Relativity and Quantum Cosmology | Computer Science::Computers and Society | Astrophysics::Cosmology and Extragalactic Astrophysics | Computer Science::Computer Science and Game Theory

The optimal inflation tax is reexamined in the framework of dynamic second best economy populated by individuals with inflation aversion. A simple formula for the optimal inflation rate is derived. Different from the literature, it is shown that if the marginal excess b... View more
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