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Analyzing Welfare Costs of Seignorage Tax and Consumption Tax
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Abstract: (5586 Views) |
| This paper has compared welfare loss from seignorage tax and consumption tax. Seignorage tax is in the form of higher money creation and transferring purchasing power from people to government and consumption tax increases level of expenditure that reduces economic welfare. In this study, by using an endogenous growth model, a structure is prepared to compare and evaluating welfare effects of these two tax policies, in which, two criteria, changes in consumption level and leisure time are used. Based on quarterly time series data for the period of 1369-1390, the results show that in the long run, seignorage tax compared with consumption tax causes more reduction in consumption and economic welfare. Moreover, model simulation shows that seignorage tax leads to more volatility in variables and has more welfare changes. |
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| Keywords: consumption tax, seignorage tax, endogenous growth model, welfare effects of tax. |
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Full-Text [PDF 724 kb]
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Type of Study: Research |
Subject:
Special
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