EconPapers    
Economics at your fingertips  
 

The Chicago Tradition and Commercial Bank Seigniorage

Erotokritos Varelas and Gerasimos Soldatos ()

Research in World Economy, 2014, vol. 5, issue 1, 29-38

Abstract: Chicago rule is shown to be the unique optimal monetary policy rule from the viewpoint of an intergenerational welfare-maximizing social planner. But, in the absence of commercial banking, it really mandates the elimination of the public sector, because it involves the elimination of central bank seigniorage and hence, of the government spending based on this seigniorage, rendering subsequently tax finance incapable of sustaining alone such spending. In the presence of commercial banking, the government does have the option of benefiting from commercial bank seigniorage by borrowing it countercyclically as implied by Chicago rule, which is found to operate like a full-reserve requirement.

Keywords: Chicago rule; Chicago plan; seigniorage; intergenerational modeling (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciedu.ca/journal/index.php/rwe/article/view/4332/2491 (application/pdf)
http://www.sciedu.ca/journal/index.php/rwe/article/view/4332 (text/html)

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:jfr:rwe111:v:5:y:2014:i:1:p:29-38

Access Statistics for this article

Research in World Economy is currently edited by Gina Perry

More articles in Research in World Economy from Research in World Economy, Sciedu Press
Bibliographic data for series maintained by Gina Perry ().

 
Page updated 2021-04-17
Handle: RePEc:jfr:rwe111:v:5:y:2014:i:1:p:29-38