Seigniorage and Inflation: The Case of Argentina.
This paper studies the relation between seigniorage and inflation in Argentina for the period 1979-1989. We estimate a money demand function and derive the Laffer curve for several sub-periods with different monetary/exchange rate regimes. We find that for most of the period the Argentine economy remained on the 'efficient' side of the Laffer curve. The long-run revenue maximizing rate of inflation has been around 20 percent per month for the 'tablita' (1979-1981) and post-Austral (1985-1988) periods and around 30 percent per month for the pre-Austral period (1982-1985). The long-run maximum level of seigniorage has been above 6 percent of GDP. Our results imply that the hyperinflation experienced by Argentina in 1989 can be interpreted as an unstable phenomenon that resulted from the need to collect a level of seigniorage that exceeded the maximum warranted by the demand for money. Copyright 1995 by Ohio State University Press.
Year of publication: |
1995
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Authors: | Kiguel, Miguel A ; Neumeyer, Pablo Andres |
Published in: |
Journal of Money, Credit and Banking. - Blackwell Publishing. - Vol. 27.1995, 3, p. 672-82
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Publisher: |
Blackwell Publishing |
Saved in:
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