Government Spending and Inflationary Finance: A Public Finance Approach

International Monetary Fund

No 1988/098, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes the relationship between inflation tax and the level of government spending in a public finance context. The key feature of the model developed is that it recognizes the possibility that conventional taxes, such as the consumption tax, may carry increasing marginal collection costs. As a result, and unlike previous findings in the literature, the inflation tax becomes an increasing function of government spending. Furthermore, the more inefficient the tax collection system, the larger the increase in the inflation tax for a given increase in government spending. A numerical analysis of the model provides additional insights into these relationships.

Keywords: WP; government spending; nominal interest rate; inflation tax (search for similar items in EconPapers)
Pages: 34
Date: 1988-01-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=28333 (application/pdf)

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:imf:imfwpa:1988/098

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().