- 6 Inflationary Expectations, Taxes, and the Demand for Money in the United States
- 7 Inflation, Taxation, and the Rate of Interest in Eight Industrial Countries, 1961–82
- 8 Financial Market Taxation and International Capital Flows
- 9 Impact of Taxation on International Capital Flows: Some Empirical Results
Back Matter
- Editor(s):
- Vito Tanzi
- Published Date:
- June 1984

INDEX
Author Index
A
Aaron, Henry, 87, 93
Alamouti, Kaveh, 140
Aliber, Robert Z., 102, 108, 220, 234
Arak, Marcelle, 87, 90, 93
Auerbach, Alan J., 92, 93
B
Ball, R.J., 76, 79–80, 93
Ben-Zion, Uri, 4, 64, 69–98, 99–109, 104, 105, 106, 108, 172, 205, 219, 220, 234
Blejer, Mario I., 3, 31, 104, 105, 106, 204–19, 205, 219, 220
Blinder, Alan S., 122, 126, 140
Box, George E.P., 129, 140
Bulow, Jeremy I., 90, 96
Byrne, William J., 10, 64
C
Callier, Philippe, 101, 108
Carlino, Gerald A., 179, 202
Carlson, John A., 77, 93, 164, 171
Carr, Jack, 69, 80, 93
Cohn, Richard, 79, 96
Cornell, Bradford, 101, 108
Criswell, Andrew R., 125, 140
Cukierman, Alex, 116
D
Darby, Michael R., 64, 70, 73, 74, 75, 77, 93, 104, 108, 112, 140, 144, 173, 185, 202, 204, 207, 219, 223, 234
Davidson, Sidney, 90, 93
Dooley, Michael P., 102, 108
Dornbusch, Rudiger, 170, 171
E
Engel, C., 128, 140
F
Fabricant, Solomon, 90, 93
Fama, Eugene F., 77, 79, 81, 93, 114, 117, 120, 140, 179
Feldstein, Martin S., 64, 70, 73, 74, 75, 77, 78–79, 84, 88, 89, 91, 94, 108, 112, 122, 126, 140–41, 144, 173, 185, 202
Fischer, Stanley, 122, 126, 140, 170, 171
Fisher, Irving, 72, 76, 83, 94, 110, 141, 172, 202
Frankel, Jeffrey A., 174, 180, 182, 202, 224, 234
Frenkel, Jacob A., 102, 108, 128, 140, 164, 167, 220, 234
Friedman, Benjamin M., 82, 94, 164, 171
G
Gandhi, Ved P., 3
Gandolfi, Arthur E., 64, 74, 75, 185, 202, 204, 219
Gibbons, Michael, 114, 140
Gibson, William E., 69, 77, 94
Goldfeld, Stephen M., 159, 171
Gonedes, Nicholas J., 90, 91, 94
Grossman, Jacob, 128, 141
H
Hansen, Lars P., 101, 108
Hartman, David G., 64, 104, 105, 106, 108, 116, 141, 205, 219, 221, 234
Hartzmark, Michael, 87, 97
Hendershott, Patric H., 88, 94
Hodjera, Zoran, 220, 234
Hodrick, Robert J., 101, 108
Howard, David H., 64, 105, 106, 108, 205, 219, 221, 234
Hu, Sheng Cheng, 88, 94
I
Iden, George, 89, 98
Isard, Peter, 102, 108
J
Jenkins, Gwilym, 129, 140
Johnson, Harry, 159
Johnson, Karen H., 64, 105, 106, 108, 205, 219, 221, 234
Joines, Douglas H., 87, 95
K
Kama, Kunio, 81, 95
Kami, Edi, 72, 95
Karnosky, Denis S., 77, 98
Katz, Menachem, 3, 24, 25, 172–203, 220–34, 223, 224
Kesselman, Jonathan, 109
Keynes, John Maynard, 17, 172, 202
Khan, Mohsin S., 126, 134, 141
Kopits, George F., 14, 64
L
Lahiri, Kajal, 64, 69, 164, 171, 179, 202
Laidler, David E.W., 159, 167, 171
Landskroner, Yoram, 90, 95
Leiderman, Leonardo, 81, 95
Levi, Maurice D., 65, 70, 75–76, 77, 84,95, 103–104, 106, 109, 111, 120, 134, 141, 173, 186, 202, 205, 213, 219, 221, 225, 227, 229, 234
Levich, Richard M., 101, 102, 108, 109, 220, 234
Levy, Haim, 90, 95
Livingston, Joseph, 77, 115, 118
Lutz, Friedrich A., 72, 95
M
Macrae, C. Duncan, 89, 95
Makin, John H., 3, 23, 43, 65, 70, 75–76, 77, 78, 79, 82, 84, 95, 110–42, 111, 114, 115, 116, 120, 121, 126, 128, 133, 134, 137, 141, 173, 182, 186, 202, 204, 219
Mandelker, Gershon, 81, 96
Miles, James A., 204, 219
Mishkin, Frederic S., 120, 126, 128, 141
Modi, Jitendra R., 3, 65, 186, 202, 205, 219, 234
Modigliani, Franco, 79, 96, 170
Mundell, Robert A., 16, 65, 71, 72, 120, 142, 173, 202
Mutén, Lief, 3
N
Nelson, Charles R., 77, 81, 96, 120, 142
Neumann, Manfred J.M., 80, 81, 96
Nielsen, Niels Christian, 65, 75, 96, 174, 186, 188, 202
Nowotny, Ewald, 65, 87, 96
O
Otani, Ichiro, 102, 109
P
Pearson, Edward F., 89, 98
Peek, Joe, 120, 139, 142, 204, 219
Piper, A.G., 89, 96
R
Roley, V. Vance, 128, 142
Roll, Richard, 77, 96, 104, 109, 204, 219
S
Sandmo, Agnar, 90, 96
Sargent, Thomas J., 65, 70, 76, 77, 96
Schoenfeld, Hanns-Martin W., 89, 96
Schultz, Henry, 136, 142
Schwert, G. William, 77, 81, 96, 120, 142
Shoven, John B., 90, 96
Siebke, Juergen, 97
Slemrod, Joel, 88, 89, 94
Solnik, Bruno, 104, 109, 204, 219
Stein, Jerome L., 100, 102, 109
Steuerle, Eugene, 65, 87, 97, 186, 203
Stiglitz, Joseph E., 89, 97
Stoll, Hans R., 102, 109
Strömberg, Dorothea, 90, 97
Summers, Lawrence H., 65, 75, 78–79, 84–85, 91, 94, 97, 122, 129, 141, 142, 174, 176, 203
T
Tandon, Kishore, 81, 96
Tanzi, Vito, 3, 19, 20, 23, 28, 43, 65, 66, 70, 73, 74, 77, 79, 82, 84, 85, 87, 88, 89, 97–98, 104, 105, 106, 109, 110–42, 111, 112, 120, 122, 128, 133, 142, 143–58, 159–71, 160, 161, 164, 166, 167, 171, 173, 179, 182, 185, 203, 204, 205, 207, 219, 223, 234
Taylor, Herbert, 98
Thornton, Henry, 72, 98, 203
Tiwari, Siddharth, 102, 109
Tobin, James, 16, 66, 72, 98, 173, 203
V
Vasarhelyi, Miklos A., 89, 98
W
Wachtel, Paul, 116
Walsh, Carl E., 82, 98
Weil, Roman, 90, 93
Weinblatt, J., 104, 105, 106, 108, 205, 219, 220, 234
Y
Yezer, Anthony M.J., 89, 95
Yitzhaki, Shlomo, 89, 94
Yohe, William P., 77, 98
Subject Index1
A
Argentina, 81
Australia, 6, 9, 11
tax deductibility of interest expense, 59t
tax treatment of interest income, 52t, 62t
Austria, 6, 9, 13
tax deductibility of interest expense, 59t
tax treatment of interest income, 52t, 62t
autoregressive models for inflation, 78–79, 129, 132
B
Belgium, 6, 9, 10, 12, 13
tax deductibility of interest expense, 59t
tax treatment of interest income, 53t, 62t
borrowers
borrowing schedules, 50–51
tax-exempt, 7, 9–10, 21–22
taxes on, 21, 27–29, 36, 47, 73, 143–55, 152
C
Canada, 6, 9, 11, 12, 13, 24, 25, 26, 32, 80, 102, 103, 176, 177, 182, 183, 185, 186, 187, 189, 190, 208, 221, 222, 223, 225, 226, 229
effective tax rates, 201t
frequency of abnormal capital flows, 227t
impact of taxation on adjustment of interest rates to inflation, 25t
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 195t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
tax treatment of interest income, 53t, 62t
capital flows
and monetary restraint, 35–36
arising from interest rate differentials, 221–25
direction of, 225–29
financial market taxation and, 204–18
frequency of abnormal, between United States and seven industrial countries, 227t
impact of taxation on, 220–30
inflation adjustment and, 28, 210–18
in industrial countries, 229–30, 227t
international, 3–4, 9, 15, 22, 32, 62t–63t, 204–18, 220–30
international financial markets, 99–107, 204–18, 220–30
tax treatment of international flows of interest income in industrial countries, 62t–63t, 208–16
taxes and, 5, 7–8, 22, 99–107, 204–18
capital gains and losses
and interest income, 48, 222–29
tax treatment of, 7, 11–12, 13, 21, 24, 39, 75, 88–92, 102–103, 186–88, 208, 222–29
closed economy
impact of taxation and inflation on interest rates, 69–86
impact of inflation on income tax, 87–92
corporation tax, 12–13, 14, 21, 45, 47, 78, 84–92, 151, 187
D
demand for money
and inflationary expectations, 159–70
and taxes, 159–70
equations, 165t, 166–70, 169t
in United States, 159–70
theories of, 4, 160–64, 166–70
Denmark, 6, 9, 11, 12, 13, 15
tax deductibility of interest expense, 59t
tax treatment of interest income, 53t, 62t
determination of interest rates
required rates for United States, 145–49, 148t
theories of, 4, 22, 24, 39, 50–51, 72–73, 172–73
E
empirical tests, 76–78, 128–34, 174
equations
demand-for-money, 165t, 166–70, 169t
Fisher (see Fisher’s theory of interest)
interest rate, 130t, 167t
Eurocurrency deposit rate, 180–81, 193t, 227, 227t, 228, 231
exchange rate behavior, 32–33, 208–16
F
Feldstein-Summers effect, 125, 133
fiscal deficits
effect on interest rates, 18, 127
of United States, 27, 30, 38, 70, 126–27, 133, 138
tax deductibility and, 7, 30, 40
fiscal illusion, 70, 77–79, 111, 113
Fisher effect, 71, 72–79, 80, 87, 91, 104, 105, 106, 125, 173–75, 179, 182–83, 185–89, 204, 205, 214, 216, 223, 224
and interest rate determination, 72–73
changes over time in, 182–85
empirical tests of, in United
States, 76–79, 174
impact of taxation on, 73–75, 185–89
Fisher’s theory of interest, 6, 16, 20, 23, 24, 51, 69, 71, 72–79, 110, 112–13, 118, 119, 121–23, 128–29, 134, 137, 160–64, 172–73, 207, 209, 212, 222–23
effect of taxation on, 73–75
foreign exchange gains and losses and capital flows, 208–16, 223–30
and interest income, 48–49, 208–17, 224–29
and tax evasion, 208, 215–16
foreign tax credit, 10
tax treatment of, 6, 7, 12, 14, 31–34, 42, 78, 208–18, 224–29
France, 6, 9, 10, 11, 12, 13, 15, 24, 25, 26, 177, 181, 182, 183, 185, 186, 187, 188, 189, 190, 221, 222,228
effective tax rates, 201t
frequency of abnormal capital flows, 227t
impact of taxation on adjustment of interest rates to inflation, 25t
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
tax treatment of interest income, 53t, 62t
Frankel method, 174–75, 180, 182, 189, 224
Friedman effect, 76
G
general equilibrium analysis, 75–81
Germany, Federal Republic of, 6, 9, 11, 12, 13, 14, 24, 25, 26, 80, 81, 102, 176, 177, 181, 182, 183, 185, 186, 187, 188, 189, 190, 208, 221, 228
effective tax rates, 201t
frequency of abnormal capital flows, 227t
impact of taxation on adjustment of interest rates to inflation, 25t
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
tax treatment of interest income, 54t, 62t
I
Iceland, 26
income
adjusted gross income, U.S., 146–58, 147t, 149t, 153t, 154t, 156t, 157t
business income, 89–92
capital income, forms of, 9
income classes, U.S., 146–58
tax incidence in United States, 149–55
tax treatment of, 9, 146–58, 204–18
income tax
and inflation effects on interest rates, 19–22, 110–58
brackets, 8, 12–13, 14, 32, 36, 39
efficiency of collection, 8
impact of inflation on, 6, 8, 12–16, 87–92
incidence on interest income in United States, 143–58, 226–30
in United States, 110–58, 147t, 149t, 154t
on assets, 21
on borrowers, 21
on business profits, 45, 89–92
personal income tax, 12, 87–89
ratio of taxes to adjusted gross income, 147t
systems in industrial countries, 6, 9–14, 12–16, 224–30
tax incentives relating to, 8, 13
industrial countries
adjustment, speed of, 193t
capital flows, 220–30, 227t
death duties, 46
depreciation, 13, 28, 32–34, 122
effective tax rates, 6, 12–14, 201t
financial markets, 99–107
impact of taxation on adjustment of interest rates to inflation, 172–201, 188t, 221–25
income tax systems, 6, 9–14, 87–92
inflation adjustment of income tax in, 12–16
interest rate response to inflation, 24–30, 25t, 79–81, 176t, 178t, 181t, 184c, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
interrelationships of interest rates, taxation, and inflation, 5, 25t, 75–81, 172–201, 220–30, 225t, 231t, 232t, 233t
long-term interest rates and inflation in, 195t, 196t, 225t, 232t, 233t
monetary restraint, 35–36
net wealth taxes, 46
short-term interest rates and inflation in, 176t, 178t, 181t, 191t, 192t, 194t, 197t, 198t, 199t, 200t, 225t, 231t, 232t
studies on relationship between interest rates and inflation, 79–81
tax provisions, 3, 9–30, 31–36, 159–70
tax treatment of foreign exchange gains and losses, 6, 9–16, 31–34, 208–16
tax treatment of interest expense, 6, 7, 9–14, 31–34, 39–41, 59t–61t, 186–89
tax treatment of interest income in, 7, 9–14, 31–34, 39–41, 52t–58t, 62t–63t, 186–89, 208–16
tax treatment of international flows of interest income, 62t–63t, 220–30
United States and seven industrial countries, 225t, 227t, 231t, 232t, 233t
(See also individual countries.)
inflationary expectations
expected inflation, behavior of, 6, 8, 16–17, 19–21, 23–25, 110–39, 114–19, 176–82, 206–18, 225t, 231t, 232t, 233t
in industrial countries, 172–89, 181t, 194t, 196t
in United States, 159–70, 181t, 194t, 196t
Livingston series of, 77, 115, 118, 164, 165, 175, 179
inflation effects on interest rates, 15–30, 19, 37–38, 110–39, 172–201, 225–33
and capital flows, 22
economic activity effect, 17
fiscal deficits, 18, 126–27
in eight industrial countries, 172–201, 176t, 178t, 181t, 188t, 191t, 192t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
institutional constraints, 17
in United States, 110–39, 225t, 231t, 232t, 233t
liquidity effects, 8, 17, 80, 174
money illusion effect, 18, 77–79
regression of interest rates on inflation, 176t
response of interest rates to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
uncertainty effect, 18, 115, 134
with income tax, 19–22
without income tax, 16–18
interest expense
and adjusted gross income, 146–58, 147t, 149t, 153t, 154t, 156t, 157t
business-related payments, 11
consumer loans, 6, 11, 15, 29–30, 47
depreciation, 13, 21, 28, 32, 33–34, 90–92, 122
inflation adjustment of, 7–8, 12–14, 26–30
in United States, 143–58, 147t, 149t, 153t, 154t
inventory accounting, 13, 21, 28, 90
mortgage payments, 6, 10, 11, 15, 29–30, 47, 186
nonbusiness-related payments, 7
of nonresidents, 10, 12, 14
tax deductibility of, 3–4, 7, 10–11, 14, 28–30, 46–48, 59t, 155–57
tax treatment of, 3, 6, 7, 9-14, 15–30, 31–34, 36–37, 42, 43–49, 59t, 143–58, 153t, 154t, 186–87; in industrial countries, 59t
interest income
and adjusted gross income, 146–58, 147t, 149t, 153t, 154t, 156t, 157t
and capital gains, 48, 223–29
and foreign exchange transactions, 48–49, 208–16, 224–25
and income tax, 143–58, 226–30
bonds, 10, 11, 18, 44, 48, 151t, 152, 164, 206–16
death duties and, 46
dividends, 47–48
effect of inflation on, 5, 7–8, 12–14, 15–30, 26, 143–58
incidence of income taxes on, in
United States, 143–58
in United States, 143–58, 147t, 149t, 153t, 154t
net wealth taxes and, 46
of lenders, zero real, 148t, 150t
of nonresidents, 10, 12, 14, 45, 52t–58t, 105
tax-exempt, 9, 21, 22, 24, 44–46, 152
tax treatment of, 3, 7, 9–14, 15–34, 36–37, 42, 43–49, 52t, 62t, 143–58, 153t, 154t, 186–87, 208–18;
in industrial countries, 52t–58t, 62t–63t
withholding taxes on, 11, 15, 45
interest rate parity, 4, 31–34, 99–106, 102–106, 207–208, 210–11.213–16, 220, 222
and tax treatment of foreign exchange transactions, 210–11,213–16
and tax treatment of interest income,210–11, 213–16
international capital movements
analytical framework for influence of taxation on, 206–16
international financial market, 99–107 (See also capital flows.)
International Monetary Fund
activities of, 41–42
Articles of Agreement, 8, 41
Executive Board, 3–4, 37
Ireland, 6, 9, 12, 13
tax deductibility of interest expense, 59t
tax treatment of interest income, 54t, 62t
Italy, 6, 9, 10, 13, 14, 15, 24, 25, 26, 176, 177, 182, 183, 185, 186, 187, 189, 221
effective tax rates, 201t
frequency of abnormal capital flows, 227t
impact of taxation on adjustment of interest rates to inflation, 25t
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 195t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
tax treatment of interest income, 54t, 62t
investments
after-tax return on, 3, 19, 21, 27, 50–51, 87–92
incentives for, 13, 21, 47, 74–75
income-generating, 47
institutional investors, 9, 22, 24, 44–46
loanable funds, 17, 18, 27, 50–51
of charities, 45
risk factor in, 18, 37, 100–101
J
Japan, 6, 9, 10, 11, 13, 14, 15, 24, 25, 26, 39, 81, 102, 177, 181, 182, 183, 185, 186, 187, 188, 189, 190, 208, 221, 228
effective tax rates, 201t
frequency of abnormal capital flows, 227t
impact of taxation on adjustment
of interest rates to inflation, 25t
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
tax treatment of interest income, 55t, 62t
K
Keynesian assumption, 17, 160, 172, 202
L
lenders
interest income, 148t, 150t, 151
interest rates required for zero real interest income, 148t, 150t
investments, 3, 19, 21, 27, 47
lending schedules, 18, 32, 50–51
taxes on, 27–28, 36, 143–55
tax-exempt, 7, 9–10, 21–22
level of interest rates, 3–4, 15–30, 50–51, 110–39
expression for, 51
in United States, 38t, 110–39
literature
on impact of taxation and inflation on interest rates, 69–98
on impact of taxation and inflation on the international financial market, 99–109
(See also Author Index.)
Livingston series of price expectations, 77, 115, 118, 164, 165, 175, 179, 180
M
monetary restraint
effect of, 8, 15–30
policies of, 3, 34–37
money illusion, 18, 144, 173
money markets, 43, 204–18, 225–29
money supply, 17
money surprises, 125–27
Mundell real balance effect, 16–17, 70–71, 74, 83, 120, 125, 173, 222, 224
Mundell-Tobin effect, 16–17, 72, 83, 120, 121, 125, 133, 173, 218
N
Netherlands, 6, 9, 11, 12, 13, 15, 24, 25, 26, 177, 181, 182, 183, 186, 187, 188, 189, 190, 208, 221
effective tax rates, 201t
frequency of abnormal capital flows, 227t
impact of taxation on adjustment of interest rates to inflation, 25t
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
tax treatment of interest income, 55t, 62t
Nielsen model, 186, 188
Norway, 6, 9, 11, 15
tax deductibility of interest expense, 59t
tax treatment of interest income, 55t, 63t
O
open economy, 78, 84–85
effects on international capital movements in, 99–106, 207–208, 220–27
P
Park-Glejser test, 132
Philips effect, 76
prices
and interest rates, 172–73
bonds, 164
consumer price index, U.S., 119t, 145–46
expected future, 115c, 117c
Livingston series of price expectations, 77, 115, 118, 164, 165, 175, 179, 180
purchasing power parity, 4, 104–105,209–10,212–13,215–16, 217, 220, 222
and tax treatment of foreign exchange
transactions, 209–210, 212–13
and tax treatment of interest income, 209–10, 212–13
with taxation and inflation, 102–106
R
real balance effect, 16, 70–71, 74, 83, 120, 125, 173, 222, 224
research, agenda for, 85–86, 106–107
S
savings
effect of inflation on, 18
returns on, 3, 125
Sweden, 6, 9, 11, 13, 15
tax deductibility of interest expense, 59t
tax treatment of interest income, 55t, 63t
Switzerland, 6, 9, 11, 13, 15
tax deductibility of interest expense, 59t
tax treatment of interest income, 56t, 63t
T
tax avoidance
tax allowances, 5
tax deferrals, 5, 44–45
tax effects on interest rates, 5, 6, 7–8, 15–30, 24, 26, 125, 163t
adjustment to inflation, 99–107, 110–39, 172–201
expected real interest rate, behavior of, 119–28, 175
in eight industrial countries, 172–201, 188t, 201t
in United States, 110–39, 143–58, 148t, 150t, 151t, 153t, 154t, 156t, 157t
taxes on borrowers, 21
taxes on other assets, 21
with income tax, 19–22
tax evasion, 22, 24, 45, 208, 215–16
tax havens, 7, 22, 45
Tobin substitution effect, 83, 120
U
United Kingdom, 6, 9, 10, 11, 12, 13, 14, 15, 24, 25, 26, 32, 46, 79–80, 102, 175, 176, 177, 181, 182, 183, 185, 186, 187, 188, 189, 190, 208, 221, 222, 223, 226, 227, 229
effective tax rates, 201t
frequency of abnormal capital flows, 227t
impact of taxation on adjustment of interest rates to inflation, 25t
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
tax treatment of interest income, 56t, 63t
United States, 4, 6, 9, 11, 13, 14, 15, 22, 24, 25, 26, 27, 28, 30, 32, 37, 38, 39, 40, 43, 44, 46, 47, 50, 70, 71, 76–79, 82, 84, 87, 88, 90, 91, 92, 102, 103, 104, 105, 111–39, 143–58, 159–70, 174, 175, 176, 177, 181, 182, 183, 185, 186, 187, 188, 189, 190, 208, 221–25, 226–27, 228–30
adjusted gross income and taxation, 147t, 149t, 153t, 154t
and seven industrial countries, 225t, 227t, 231t, 232t, 233t
bond yields and interest rates, 151t
consumer price index, forecasts of, 119t
demand for money, 159–70
Economic Recovery Tax Act, 38, 84, 91, 92, 113, 133, 137–38
effective tax rates, 201t
Federal Reserve Board, 84, 119, 135, 139, 183
frequency of abnormal capital flows, 227t
Government, net balance, 155–58, 156t, 157t
impact of taxation on adjustment of interest rates to inflation, 25t
income tax, 87–88, 143–58, 226–30
inflation, 50, 110–39, 143–58, 159–70
interest rate response to inflation, 176t, 178t, 181t, 184c, 188t, 191t, 192t, 193t, 194t, 195t, 196t, 197t, 198t, 199t, 200t, 225t, 231t, 232t, 233t
tax deductibility of interest expense, 59t
Tax Equity and Fiscal Responsibility Act, 38
tax system, 76–92, 143–58, 159–70
tax treatment of interest income, 40, 44, 46, 47, 56t, 63t, 143–58, 148t, 150t, 153t, 154t, 220–30
tests of Fisher effect in, 76–79, 174
treasury bills, 118, 121c, 131t, 132c, 135t
volatility of interest rates, 38t, 82, 110–39
V
velocity, monetary, 135–36
velocity growth surprises, 135t
volatility of interest rates, 8, 15–30, 37–39, 38t, 51, 82–83, 110–39
equations for, 51
in United States, 38t, 110–39
Letters are used as follows: c for chart and t for table.