Optimal inflation and the government revenue mix

Research output: Contribution to journalArticlepeer-review

Abstract

This paper examines the question of optimal inflation and taxation as a government optimal control problem. By inclusion of bond finance and portfolio decisions by private agents in a perfect foresight framework it is shown that: (i) optimal steady state inflation is independent of government revenue requirements, (ii) inflation and tax rates do not necessarily move together in optimum.

Original languageEnglish
Pages (from-to)151-154
Number of pages4
JournalEconomics Letters
Volume31
Issue number2
DOIs
StatePublished - Dec 1989
Externally publishedYes

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