Tax efficiency, seigniorage and Central Bank Conservativeness
Judit Garcia and
Journal of Macroeconomics, 2018, vol. 56, issue C, 218-230
We analyse how conservative should an independent central bank be in an economy where the taxable revenue depends on the institutional quality. Initially, we propose an indicator of the degree of conservativeness of a central bank and, then, we characterise its optimal value. We find that the central bank has to be more conservative than the government, except with complete tax inefficiency. Furthermore, we show that the relationship between the optimal relative degree of conservativeness of the central bank and tax efficiency is affected by the volatility of supply shocks. Concretely, when these shocks are not important, the central bank should be less conservative if tax efficiency gets worse. However, this result may not hold when the shocks are relevant. Finally, we examine under which conditions the government would be willing to dedicate more efforts to improve tax efficiency.
Keywords: Central Bank Conservativeness; Fiscal policy; Monetary policy; Seigniorage; Tax efficiency (search for similar items in EconPapers)
JEL-codes: D6 E52 E58 E62 E63 H21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:56:y:2018:i:c:p:218-230
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 ().