Roberto Bonfatti (),
K. KÄ±vanÃ§Karaman and
No 926, Economics Series Working Papers from University of Oxford, Department of Economics
Monetary capacity refers to a stateâ€™s capacity to circulate money that is accepted by the public, while fiscal capacity refers to its capacity to tax. We argue that monetary and fiscal capacity, and by extension, markets and states are complements. The long-run European evidence since antiquity shows money stocks and tax revenues moving in close synch. History also offers a natural experiment to estimate the causal effect of monetary capacity on fiscal capacity. The discovery of silver in the New World increased money stocks followed by tax revenues, a finding that is robust to controlling for economic growth.
Keywords: monetary capacity; fiscal capacity; monetization; inflation; taxation; quantity theory of money; monetary non-neutrality (search for similar items in EconPapers)
JEL-codes: E50 E60 H21 N10 O11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac, nep-mon and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Working Paper: Monetary Capacity (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:926
Access Statistics for this paper
More papers in Economics Series Working Papers from University of Oxford, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Anne Pouliquen ( this e-mail address is bad, please contact ).