Government Spending and Inflationary Finance: A Public Finance Approach

Carlos A. Végh
Additional contact information
Carlos A. Végh: International Monetary Fund

IMF Staff Papers, 1989, vol. 36, issue 3, 657-677

Abstract: The dependence of the inflation tax on the level of government spending is analyzed in a public finance context. The key feature of the model is that it recognizes the possibility that conventional taxes, such as the consumption tax, carry increasing marginal collection costs. As a result, the inflation tax becomes an increasing function of government spending. Furthermore, the more inefficient the tax-collection system is, the larger is the rise in the nominal interest rate for a given increase in government spending. A numerical analysis of the model provides additional insights into these relationships.

Date: 1989
References: Add references at CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://www.jstor.org/stable/3867051?origin=pubexport main text (application/pdf)
Access to full text is restricted to subscribers.

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:pal:imfstp:v:36:y:1989:i:3:p:657-677

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().