This paper examines the welfare effects of mitigating the costs of inflation. In a simple model where money reduces … transaction costs, a fall in the costs of inflation is equivalent to financial innovation. This can be caused by paying interest … on deposits, indexing money, or “dollarizing.” Results indicate that financial innovation raises welfare in low inflation …

revenue from seigniorage for the EC member countries with particular focus on the high inflation countries. Assuming that by …The paper measures the effects of the integration of European financial markets and lower inflation in the EMS on the … 1992 all EC members participate fully in the EMS and reserve requirements are unified, the revenue from seigniorage will be …

equilibrium with no inflation and no default exists. However, highly-indebted countries are more likely to default once they join …

progressive dollarization. The paper also analyzes the impact of dollarization on the ability of governments to earn seigniorage …

In this paper three possible reasons are examined for a sluggish inflation response to a hard currency peg. Models of … credibility and the speed of private sector learning, which are shown to have a major impact on the speed of inflation adjustment …. But even if individual agents believe the government will not devalue, it is shown that inflation inertia can still arise …

This paper explains why sovereign issuers of reserve currencies do not use unexpected inflation to repudiate their … excessive money creation. It is shown that even without policy precommitment or aversion to inflation, the availability of … alternative currencies can support an equilibrium with a finite, time consistent inflation rate …

This paper provides general equilibrium estimates of the steady-state welfare gains of lowering inflation from a low … tax, it is found that inflation unambiguously reduces capital intensity, drives up the before-tax real rate of return to …

Macroeconomic theory postulates that fiscal deficits cause inflation. Yet empirical research has had limited success in … incorporates two key features of the theory. Unlike previous studies, we model inflation as nonlinearly related to fiscal deficits … through the inflation tax base and estimate this relationship as intrinsically dynamic, using panel techniques that explicitly …

This paper focuses on the role of debt maturity in managing the government’s incentives to use opportunistic inflation … powerful instrument to affect the time profile of the inflation tax base and, hence, to mitigate the distortions introduced by …