Maximising Seigniorage and Inflation Tax: The Case of Belarus

D r. (elect.) Julia Korosteleva

Working Papers from Business School - Economics, University of Glasgow

Abstract: While most Central European countries, realising the inflationary potential of money creation, had by the mid-1990s switched to market instruments based monetary policy, Belarus continued to use money emission, so gaining seigniorage and inflation tax. The productivity of the inflation tax can be analysed by comparing the revenue actually raised from inflation tax with the revenue that could be raised if the quantity of money had risen at a constant rate. The present paper, based on Cagan’s (1956) seminal work ‘Monetary Dynamics of Hyperinflation’, analyses the effect of inflation on seigniorage revenue in Belarus and draws conclusions about the effectiveness of monetary policy in 1995-2002, and about the consequences of inflationary financing.

JEL-codes: C12 C22 E42 E52 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-cis, nep-fin, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2006_5

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