Private Saving, Public Saving, and the Inflation Tax: Another Look At An Old Issue

April 1, 1993

Preview Citation

Format: Chicago

A. J Hamann Private Saving, Public Saving, and the Inflation Tax: Another Look At An Old Issue, (USA: International Monetary Fund, 1993) accessed December 22, 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

The present paper provides an analytical discussion on a popular issue: the measurement problems associated with the inflation tax. It is well known that conventional national accounts definitions usually misplace the proceeds from the inflation tax: they are typically not subtracted from disposable income, and they are not included as part of the Government’s revenues “above the line.” Using a simple, perfect foresight monetary model developed by Calvo (1986, 1987), this paper analyzes the difference between macroeconomically relevant concepts of public and private saving, and their national accounts counterparts. The paper goes on to show that the national account aggregates create the impression that heavier reliance on the inflation tax on the part of the Government is associated with higher private saving, even in situations where the composition of government revenues does not have any effect on private saving.

Subject: Budget planning and preparation, Government debt management, Inflation, National accounts, Prices, Private savings, Public financial management (PFM)

Keywords: Aggregates dNA, Budget constraint, Budget deficit, Budget planning and preparation, Consumption possibility, Current account outcome, Government debt management, Inflation, Private savings, Rate of inflation, WP

Publication Details

Pages:

20
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 1993/037
Stock No:

WPIEA0371993
ISBN:

9781451845495
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers