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Monetary Indexation and Revenues from Money Creation: The Case of Iceland
Author: International Monetary Fund
Series:
IMF Working Papers
Volume/Issue:
Volume 1990: Issue 020
Language:
English
Publication Date:
01 Jan 1990
DOI:
https://doi.org/10.5089/9781451921939.001
ISBN:
9781451921939
ISSN:
1018-5941
Pages:
38
Keywords:
WP; demand; interest rate; economic growth; monetary indexation; revenues from money creation; indexation scenario; financiable deficit; indexation period; inflation tax revenue; public finance; case of indexation; indexation of base money; indexation of financial assets; Switching-term deposit; Inflation; Currency issuance; Real interest rates; Monetary base; Demand for money
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper discusses the effects of monetary indexation on the revenues from monetization in Iceland. The paper starts by showing that monetization revenues fell sharply after indexation was introduced in 1979 and evaluates the different and partly ambiguous factors behind this development. The fiscal consequences are then examined in light of the fact that revenues from monetization have traditionally made up a substantial part of Government revenues in Iceland. Different policy options are simulated using the framework of the public finance approach to inflation. The simulations focus on the relation of fiscal deficits to inflation, output growth, and internal and external debt.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund