The optimal inflation tax

Isabel Correia (ihc@ucp.pt) and Pedro Teles

No 123, Discussion Paper / Institute for Empirical Macroeconomics from Federal Reserve Bank of Minneapolis

Abstract: We determine the second best rule for the inflation tax in monetary general equilibrium models where money is dominated in rate of return. The results in the literature are ambiguous and inconsistent across different monetary environments. We compare the derived optimal inflation tax solutions across the different environments and find that Friedman's policy recommendation of a zero nominal interest rate is the right one.

Keywords: Inflation (Finance); Taxation (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (10)

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Journal Article: The Optimal Inflation Tax (1999)
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