Seiya, Fujisaki and Kazuo, Mino (2010): Growth and Distributional Effects of Inflation with Progressive Taxation.
Download (143kB) | Preview
This paper examines the growth and income distribution effects of inflation in a growing economy with heterogeneous households and progressive income taxation. Assuming that the cash-in-advance constraint applies to investment as well as to consumption spending, we show that a higher growth of monetary supply yields a negative impact on growth and an ambiguous effect on income distribution. Numerical example with plausible parameter values, however, demonstrate that those long-run effects of inflation tax are rather small. In contrast, fiscal distortion caused by progressive taxation yield significant impacts on growth and distribution
|Item Type:||MPRA Paper|
|Original Title:||Growth and Distributional Effects of Inflation with Progressive Taxation|
|Keywords:||Inflation Tax, Progressive Income Tax, Growth, Income Distribution|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
|Depositing User:||Kazuo Mino|
|Date Deposited:||25. Oct 2010 07:53|
|Last Modified:||30. Dec 2015 18:21|
Barro, R.J., 1996, Inflation and growth, Federal Reserve Bank of St. Louis Review 78, 153-169.
Chen, B-L., Hsu, M. and Lu, C-H. (2008), "Inflation and Growh: Impaitence and a Qualitative Equivalence", Journal of Money, Credit, and Banking 40, 1309-1323.
Chen, Shu-Hua & Guo, Jang-Ting, 2008, Velocity of money, equilibrium (in)determinacy and endogenous growth, Journal of Macroeconomics 30, 1085-1096.
De Gregorio, J., 1993, Inflation taxation, and long-run growth, Journal of Monetary Economics 31, 271-298.
Guo, J.-T., and Lansing, K. J., 1998, Indeterminacy and stabilization policy, Journal of Economic Theory 82, 481-490.
Jha, S.K., Wang, P., and Yip, C.K. (2002) Dynamics in a transactions-based monetary growth model, Journal of Economic Dynamics and Control 26, 611-635.
Meng, Q., 2002, Monetary policy and multiple equilibria in a cash-in-advance economy, Economics Letters 74, 165-170.
Suen, M-H. and Yip, C-K., 2005, Superneutrality, Indeterminacy and Endogenous Growth, Journal of Macroeconomics 27, 579-595.
Jones, L.E. and Manuelli, R.E., 1995, Growth and effects of inflation, Journal of Economic Dynamics and Control 19, 1405-1428.
Li, W. and Sarte, P-D. 2004., Progressive taxation and long-run growth, American Economic Review 94, 1705-1716.
Marquis, M.H. and Reffett, K.L., 1995, The inflation tax in a convex model of equilibrium growth, Economica 62, 109-121.
Mino, K., 1997, Long-run effects of monetary expansion in a two-sector model of endogenous growth, Journal of Macroeconomics 19, 635-655.
Sarte, P-D., 1997. "Progressive taxation and income inequality in dynamic competitive equilibrium," Journal of Public Economics 66, 145-171.
Temple, J., 2000, Inflation and growth: stories short and tall, Journal of Economic Surveys 14, 395-426.