Inflation Aversion and the Optimal Inflation Tax

Article, Preprint OPEN
Gaowang Wang; Heng-fu Zou;
  • 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
  • References (32)
    32 references, page 1 of 4

    Atkinson, Authony and Joseph Stiglitz, 1972. The structure of indirect taxation and economic e ciency. Journal of Public Economics 1, 97-119.

    Auernheimer, Leonardo, 1974. The honest government's guide to the revenue from the creation of money. Journal of Political Economy 82, 598-606.

    Bailey, Martin, 1956. The welfare cost of in ationary nance. Journal of Political Economy 64, 93-110.

    Blanchard, Olivier and Stanley Fischer, 1990. Lectures on Macroeconomics. The MIT Press; Cambridge, Massachusetts; London, England.

    Bohm-Bawerk, Eugen, 1891. The Positive Theory of Capital. Macmillan, London.

    Burns, Arthur, 1978. The Condition of the American Economy. American Enterprise Institute for Public Research, Washington, D.C..

    Chamley, Christophe, 1985. On a simple rule for the optimal in ation rate in second best taxation. Journal of Public Economics 26, 35-50.

    Chamley, Christophe, 1985. E cient Taxation in a Stylized Model of Intertemporal General Equilibrium. International Economic Review 26, 451-468.

    Chamley, Christophe, 1986. Optimal Taxation of Capital Income in General Equilibrium with In nite Lives. Econometrica 54, 607-622.

    Chari, Varadarajan, Lawrence Christiano, and Patrick Kehoe, 1996. Optimality of the Friedman Rule in Economies with Distorting Taxes. Journal of Monetary Economics 37, 203-223.

  • Related Organizations (4)
  • Metrics
Share - Bookmark