Money Demand and the Potential of Seigniorage in China

Geneviève Boyreau-Debray ()

No 199821, Working Papers from CERDI

Abstract: Since 1978 China has been experiencing a strong monetary growth. However annual inflation has not exceeded 20%. One of the outcomes has been a high level of seigniorage. This paper looks for the factors that have enabled to collect this quasi-inflation-free revenue and asks the question of whether or not China can still rely on this kind of financing. For this purpose, an augmented Cagan's money demand is specified which takes into account the transitional characteristics of this economy. A Laffer type model is derived from it and provides an analysis of the dynamics of the potential of seigniorage.

Keywords: China; Transitional economies; Seigniorage; Money demand; Monetization; Financial deepening (search for similar items in EconPapers)
Pages: 20
Date: 1998
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Citations: View citations in EconPapers (1)

Published in Techniques financières et Développement, sept.-oct. 1998, pages 26-38
Published in Techniques financières et Développement

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