EconPapers    
Economics at your fingertips  
 

Debt, seigniorage, and the Growth Laffer Curve in developing countries

Helene Ehrhart, Alexandru Minea () and Patrick Villieu ()

Journal of Macroeconomics, 2014, vol. 42, issue C, 199-210

Abstract: The endogenous growth literature established the existence of an inverted-U curve between taxes and economic growth, namely a Growth Laffer Curve, but empirical evidence on this relationship in developing countries is rather limited. Given that seigniorage and public debt are also important means of financing public spending in these countries, we take into account in this paper their respective impacts on growth, as they might deform the existing relationship between taxes and growth. To this end, we develop a growth model with public investment as the engine of perpetual growth, and look for the effect of debt, tax and money financing on economic growth. We study in particular the way fiscal and monetary policies deform the Growth Laffer Curve in developing countries. An empirical section based on a panel of 100 developing countries over the period 1980–2010 provides both OLS-Fixed Effects and GMM-system estimations that support our theoretical conclusions, namely the existence of Growth Laffer Curves indexed by the levels of debt and of seigniorage.

Keywords: Growth Laffer Curve; Taxes; Debt; Seigniorage; Developing countries (search for similar items in EconPapers)
JEL-codes: E52 E63 H62 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0164070414000950
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Debt, seigniorage, and the Growth Laffer Curve in developing countries (2014)
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:eee:jmacro:v:42:y:2014:i:c:p:199-210

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-08-20
Handle: RePEc:eee:jmacro:v:42:y:2014:i:c:p:199-210