On Optimal Currency Substitution Policy and Public Finance

Zvi Hercowitz () and Efraim Sadka

Chapter 4 in Economic Policy in Theory and Practice, 1987, pp 147-169 from Palgrave Macmillan

Abstract: Abstract One of the means of raising revenue available to a government is the inflation tax on domestic money balances. The demand for these balances and the revenue from inflation depend, among other things, on the tax rate itself and on the degree of substitutability between domestic money and alternative assets, which are referred to in the paper as foreign exchange. (However, the discussion can be interpreted as involving money substitutes in general.)

Keywords: Utility Function; Labour Supply; Budget Constraint; Foreign Exchange; Money Demand (search for similar items in EconPapers)
Date: 1987
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DOI: 10.1007/978-1-349-18584-9_4

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