Ritter, Moritz (2007): The Optimum Quantity of Money Revisited: Distortionary Taxation in a Search Model of Money.
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This paper incorporates a distortionary tax into the microfoundations of money framework and revisits the optimum quantity of money. An optimal policy may consist of both a positive tax rate and a positive nominal interest rate: if the buyer’s surplus share is inefficiently small, the intensive margin is distorted and the constrained optimal policy combines a sales tax with a money growth rate above that prescribed by the Friedman rule. Monetary, but not fiscal, policy alters the agent’s bargaining position, leaving a special role for a deviation from the Friedman rule. Under similar conditions, this conclusion carries over to competitive pricing.
|Item Type:||MPRA Paper|
|Institution:||University of Toronto|
|Original Title:||The Optimum Quantity of Money Revisited: Distortionary Taxation in a Search Model of Money|
|Keywords:||Money; Search; Friedman Rule; Sales Tax|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy
|Depositing User:||Moritz Ritter|
|Date Deposited:||02. Mar 2007|
|Last Modified:||11. Feb 2013 23:18|
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