The optimal inflation tax

Isabel Correia; Pedro Teles

doi:10.1006/redy.1998.0040

The optimal inflation tax

Isabel Correia^*, Pedro Teles

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

26 Citations (Scopus)

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 derive and compare the 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. Journal of Economic Literature Classification Numbers: E31, E41, E58, E62.

Original language	English
Pages (from-to)	325-346
Number of pages	22
Journal	Review of Economic Dynamics
Volume	2
Issue number	2
DOIs	https://doi.org/10.1006/redy.1998.0040
Publication status	Published - Apr 1999

Keywords

Friedman rule
Inflation tax

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10.1006/redy.1998.0040

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title = "The optimal inflation tax",

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 derive and compare the 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. Journal of Economic Literature Classification Numbers: E31, E41, E58, E62.",

keywords = "Friedman rule, Inflation tax",

author = "Isabel Correia and Pedro Teles",

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AB - 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 derive and compare the 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. Journal of Economic Literature Classification Numbers: E31, E41, E58, E62.

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KW - Inflation tax

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DO - 10.1006/redy.1998.0040

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JO - Review of Economic Dynamics

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The optimal inflation tax

Abstract

Keywords

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