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Deficit, Seigniorage and the Growth Laffer Curve in developing countries

Helene Ehrhart, Alexandru Minea () and Patrick Villieu ()

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Abstract: The endogenous growth literature has established the existence of an inverted-U curve between taxes and economic growth, namely a Growth Laffer Curve (GLC). We develop a growth model with public investment as the engine of perpetual growth, and look for the effect of deficit, tax and money financing on economic growth. We study in particular the way fiscal and monetary policies (through deficit and seigniorage respectively) deform the GLC. An empirical section based on a panel of developing countries provides GMM-system estimators that support our theoretical conclusions.

Keywords: Growth Laffer Curve; deficit; seigniorage; developing countries; GMM; panel data (search for similar items in EconPapers)
Date: 2011-01-10
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Working Paper: Deficit, Seigniorage and the Growth Laffer Curve in developing countries (2009) Downloads
Working Paper: Deficits, Seignorage and the Growth Laffer Curve in Developing Countries (2009) Downloads
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