Seigniorage Revenue and Inflation Tax: Testing Optimal Seigniorage Theory for Turkish Economy

Bulent Dogru

MPRA Paper from University Library of Munich, Germany

Abstract: The goal of this study is to test the implication of Mankiv’s (1987) optimal seigniorage theory suggesting that in the long run higher tax rates are associated with higher inflation rates and higher nominal interest rates for Turkish Economy using time series dataset for the time period 1980-2011.We examine the long run relationship between nominal interest rates, inflation and tax revenue. For this purpose, we estimate the Mankiw’soptimal seigniorage model for Turkish Economy with the cointegration and vector error correction methods (VECM) techniques. According to econometric result, in long run there is a causality relationship from inflation and tax revenue to nominal interest rates. However, in short run we could not find any evidence that support the causality from inflation and tax revenue to nominal interest rates

Keywords: seigniorage and inflation tax; optimal seigniorage theory; Turkish economy; error correction model; cointegration analysis (search for similar items in EconPapers)
JEL-codes: E6 E62 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-acc, nep-ara, nep-mac, nep-mon and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in International Journal of Economics and Finance 5.6(2013): pp. 122-133

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:47885

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