Government Spending, Money Seigniorage and Macroeconomic Instability

Kim-Heng Tan
Additional contact information
Kim-Heng Tan: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore

No 512, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

Abstract: This paper addresses the issue of the macroeconomic instability of the output effects of government spending financed by money seigniorage. The contribution of the paper is to show that these output effects are dependent on where the economy is in relation to certain inflation thresholds and that these thresholds are affected by the degree of ‘substitutability’ between government spending and private consumption. When government spending has no intertemporal effect on private consumption, there exists a single inflation threshold. When government spending has an intertemporal effect on private consumption, there exist two inflation thresholds. As the economy crosses each inflation threshold, it will suffer a reversal of output effects.

Keywords: reversal of output effects; inflation; money seigniorage; substitutability; complementarity (search for similar items in EconPapers)
JEL-codes: E52 E62 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2005-12
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www3.ntu.edu.sg/hss2/egc/wp/2005/2005-12.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nan:wpaper:0512

Access Statistics for this paper

More papers in Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre Contact information at EDIRC.
Bibliographic data for series maintained by Magdalene Lim ().