Collection Lags and the Optimal Inflation Tax: A Reconsideration

34 Pages Posted: 15 Feb 2006

See all articles by Alexandros Mourmouras

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department

José Tijerina

affiliation not provided to SSRN

Date Written: July 1993

Abstract

The observation that collection lags combine with inflation to erode fiscal revenues has long been a strong argument against seigniorage (Tanzi (1978)). However, with the exception of Dixit (1991), who used a general equilibrium model to reject this argument, the optimal tax literature has not analyzed how collection lags affect desired tax structures. In this paper, this issue is re-examined using an overlapping generations version of Dixit`s model. It is shown that depending on the specification of the collection cost function and the size of government spending in GDP, collection lags may increase, leave unchanged, or reduce the desired rate of inflation.

JEL Classification: H21, E31, E60

Suggested Citation

Mourmouras, Alexandros and Tijerina, José, Collection Lags and the Optimal Inflation Tax: A Reconsideration (July 1993). IMF Working Paper No. 93/60, Available at SSRN: https://ssrn.com/abstract=883535

Alexandros Mourmouras (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Room 5-311
Washington, DC 20431
United States
202-623-5402 (Phone)
202-589-5402 (Fax)

José Tijerina

affiliation not provided to SSRN

No Address Available

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
58
Abstract Views
593
rank
491,175
PlumX Metrics