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Private Saving, Public Saving, and the Inflation Tax: Another Look At An Old Issue
Author:
Mr. A. J Hamann
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https://orcid.org/0000-0002-6363-0398
Series:
IMF Working Papers
Volume/Issue:
Volume 1993: Issue 037
Language:
English
Publication Date:
01 Apr 1993
DOI:
https://doi.org/10.5089/9781451845495.001
ISBN:
9781451845495
ISSN:
1018-5941
Pages:
20
Keywords:
WP; budget deficit; budget constraint; rate of inflation; aggregates dNA; current account outcome; consumption possibility; Inflation; Private savings; Budget planning and preparation; Government debt management
Legal-disclaimer:
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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The present paper provides an analytical discussion on a popular issue: the measurement problems associated with the inflation tax. It is well known that conventional national accounts definitions usually misplace the proceeds from the inflation tax: they are typically not subtracted from disposable income, and they are not included as part of the Government’s revenues “above the line.” Using a simple, perfect foresight monetary model developed by Calvo (1986, 1987), this paper analyzes the difference between macroeconomically relevant concepts of public and private saving, and their national accounts counterparts. The paper goes on to show that the national account aggregates create the impression that heavier reliance on the inflation tax on the part of the Government is associated with higher private saving, even in situations where the composition of government revenues does not have any effect on private saving.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1993: Issue 037