Inflation taxation and welfare with externalities and leisure

Ho, W.M., Zeng, J.L. and Zhang, J. (2007) Inflation taxation and welfare with externalities and leisure. Journal of Money Credit And Banking, 39 1: 105-131. doi:10.1111/j.0022-2879.2007.00005.x

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Author Ho, W.M.
Zeng, J.L.
Zhang, J.
Title Inflation taxation and welfare with externalities and leisure
Journal name Journal of Money Credit And Banking   Check publisher's open access policy
ISSN 0022-2879
Publication date 2007-01-01
Year available 2007
Sub-type Article (original research)
DOI 10.1111/j.0022-2879.2007.00005.x
Volume 39
Issue 1
Start page 105
End page 131
Total pages 27
Editor Lam, P.S.
Lucas, D.
Ogaki, M.
West, K.D.
Place of publication Oxford
Publisher Blackwell Publishing
Language eng
Subject C1
Abstract This paper examines how inflation taxation affects resource allocation and welfare in a neoclassical growth model with leisure, a production externality and money in the utility function. Switching from consumption taxation to inflation taxation to finance government spending reduces real money balances relative to income, but increases consumption, labor, capital, and output. The net welfare effect of this switch depends crucially on the strength of the externality and on the elasticity of intertemporal substitution. While it is always negative without the externality, it is likely to be positive with a strong externality and elastic intertemporal substitution.
Keyword Business, Finance
Endogenous Growth-model
In-advance Economy
Long-run Growth
Increasing Returns
Friedman Rule
Q-Index Code C1
Q-Index Status Confirmed Code

Document type: Journal Article
Sub-type: Article (original research)
Collections: Excellence in Research Australia (ERA) - Collection
2008 Higher Education Research Data Collection
School of Economics Publications
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Citation counts: TR Web of Science Citation Count  Cited 10 times in Thomson Reuters Web of Science Article | Citations
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Created: Tue, 19 Feb 2008, 02:20:51 EST