Fiscal Revenue and Inflationary Finance

Fiscal Revenue and Inflationary Finance
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Volume/Issue:
1990/48
Series:
IMF Working Papers
Author(s):
Nurun Choudhry
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
May 1990
DOI:
http://dx.doi.org/10.5089/9781451972184.001
ISBN:
9781451972184
ISSN:
1018-5941
Page:
32
This paper analyzes the erosion of fiscal revenue by inflation resulting from the issuance of money. The empirical evidence for a number of developing countries supports the well-known hypothesis that an increase in inflation will result in a fall in real fiscal revenue because of collection lags, thereby possibly widening the fiscal deficit. As such, attempts to generate resources to finance government expenditures via the inflation tax will involve a loss in other revenues, making this form of taxation even less desirable.
Article

Fiscal Revenue and Inflationary Finance

Author(s):
Nurun Choudhry
Published Date:
May 1990
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