Seigniorage in a Cross-Section of Countries

Click, Reid W.

doi:10.2307/2601207

Cited by 100 publications

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“…7 Aisen and Veiga (2005a) show that a de jure measure of openness taken from the Index 5 Catao and Terrones (2005) present a model in which …scal de…cits cause in ‡ation via the seigniorage channel and provide evidence consistent with the model. Click (1998) and Aisen and Veiga (2005b) provide empirical evidence on the determinants of seigniorage and in ‡ation respectively, and both studies are motivated from a public …nance perspective. 6 Razin (2005) develops a micro-founded model in which trade and …nancial openness increase society's aversion to unexpected in ‡ation.…”

Section: Openness and In ‡Ation Volatilitymentioning

confidence: 99%

Openness and inflation volatility: Panel data evidence

Bowdler

Malik

2017

The North American Journal of Economics and Finance

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Trade openness can reduce inflation volatility through limiting recourse to seigniorage during periods of temporary fiscal deficits, and by shifting consumption and production towards goods for which the terms of trade are relatively stable. This paper provides evidence for a negative effect of openness on inflation volatility using a dynamic panel model that controls for the endogeneity of openness and the effects of both average inflation and the exchange rate regime. The relationship is found to be strongest amongst developing and emerging market economies. We show that openness reduces the volatility of reserve money growth and terms of trade growth and that these effects contribute to the relationship between openness and inflation volatility.

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Section: Openness and In ‡Ation Volatilitymentioning

confidence: 99%

Openness and inflation volatility: Panel data evidence

Bowdler

Malik

2017

The North American Journal of Economics and Finance

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“…With such shocks domestic currency bonds become imperfect substitutes for other asset classes because their underlying real return characteristics are different in a way that cannot be hedged. The evidence presented in Click (1998) strongly suggests that such shocks are an important feature of the data. He finds, in a large cross-section of countries, that most permanent government spending is financed by conventional tax revenue while transitory government spending is financed mainly by seigniorage.…”

Section: Introductionmentioning

confidence: 92%

International Currency Portfolios

Kumhof

2009

IMF Working Papers

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This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper develops a theory of international currency portfolios that holds in general equilibrium, and that is therefore not subject to the criticisms directed at the portfolio balance literature of the 1980s. It shows that, under plausible assumptions about fiscal policy, the relationship between the rates of return of different currency bonds is not correctly described by an arbitrage relationship but instead also depends on outstanding bond stocks. Other findings are: (1) There is a monotonically increasing relationship between domestic interest rates and the portfolio share of domestic currency denominated assets. This relationship is steep at low levels of government debt, and almost flat at high levels of government debt. (2) Optimal private sector foreign currency positions are negative, and their size is decreasing in exchange rate volatility. Under volatile exchange rates large negative aggregate net foreign asset positions can only be rationalized by assuming large public sector borrowing from foreign governments. (3) For a baseline economy with zero net foreign assets, open market sales of domestic government debt lead to valuation gains (losses) when the country as a whole has a short (long) position in foreign currency. (4) A fiscal theory of exchange rate determination is compatible with general equilibrium in a two-country world. (5) Equilibria are determinate when both fiscal and monetary policy are passive.

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“…2 For an introduction and analysis see Buiter (2007). For some empirical evidence see Click (1998). When money supply is issued by a central bank or monetary authority that is not legally part of the government, resource transfers to fiscal authorities from the central bank or monetary authority rather than seigniorage itself are part of fiscal resources.…”

Section: B Fiscal Resource Categoriesmentioning

confidence: 99%

Fiscal Resources for Inclusive Growth

Dasgupta¹

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The views expressed in this paper are those of the author and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. Terms of use: Documents inADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.By making any designation of or reference to a particular territory or geographic area, or by using the term "country" in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. Note: In this publication, "$" refers to US dollars.The ADB Economics Working Paper Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia's development and policy challenges; strengthen analytical rigor and quality of ADB's country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness.

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Seigniorage in a Cross-Section of Countries

Cited by 100 publications

References 0 publications

Openness and inflation volatility: Panel data evidence

Openness and inflation volatility: Panel data evidence

International Currency Portfolios

Fiscal Resources for Inclusive Growth

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