HOW INFLATION TAX INFLUENCES WELFARE UNDER PERFECT MOBILITY OF CAPITAL Cover Image

WPŁYW PODATKU INFLACYJNEGO NA DOBROBYT W WARUNKACH DOSKONAŁEJ MOBILNOŚCI KAPITAŁU
HOW INFLATION TAX INFLUENCES WELFARE UNDER PERFECT MOBILITY OF CAPITAL

Author(s): Michał Konopczyński
Subject(s): Economy, National Economy, Economic policy, Financial Markets
Published by: Szkoła Główna Gospodarstwa Wiejskiego w Warszawie
Keywords: inflation tax; optimal fiscal policy; perfect capital mobility; dynamic general equilibrium; welfare;

Summary/Abstract: We are building a general equilibrium model in which the private sector can invest abroad or borrow there with a fixed interest rate. The public sector levies five types of taxes that are used to finance public consumption. The central bank determines the rate of inflation, which affects the real tax burden. Using optimal control theory we solve the model and analyze the relationship between inflation and welfare achieved by consumers. We demonstrate that there may exist a unique optimal rate of inflation.

  • Issue Year: XV/2014
  • Issue No: 3
  • Page Range: 133-144
  • Page Count: 12
  • Language: Polish
Toggle Accessibility Mode