Fiscal Revenue and Inflationary Finance

May 1, 1990

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Nurun N. Choudhry Fiscal Revenue and Inflationary Finance, (USA: International Monetary Fund, 1990) accessed November 24, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the erosion of fiscal revenue by inflation resulting from the issuance of money. The empirical evidence for a number of developing countries supports the well-known hypothesis that an increase in inflation will result in a fall in real fiscal revenue because of collection lags, thereby possibly widening the fiscal deficit. As such, attempts to generate resources to finance government expenditures via the inflation tax will involve a loss in other revenues, making this form of taxation even less desirable.

Subject: Expenditure, Government debt management, Inflation, Monetary base, Money, National accounts, Personal income, Prices, Public financial management (PFM)

Keywords: Africa, Asia and Pacific, Fiscal revenue, Government debt management, Inflation, Inflation revenue, Lag coefficient, Middle East, Monetary base, Personal income, Rate of inflation, Revenue, Revenue-maximizing inflation rate, Welfare cost ratio, Western Hemisphere, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1990/048
Stock No:

WPIEA0481990
ISBN:

9781451972184
ISSN:

1018-5941

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