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Ownership of Capital in Monetary Economies and the Inflation Tax on Equity
Author:
Mr. Thomas F. Cosimano null

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Mr. Ralph Chami
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Connel Fullenkamp null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1999: Issue 167
Language:
English
Publication Date:
01 Dec 1999
DOI:
https://doi.org/10.5089/9781451858167.001
ISBN:
9781451858167
ISSN:
1018-5941
Pages:
44
Keywords:
WP; capital stock
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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Financial instruments are subject to inflation taxes on the wealth they represent and on the nominal income flows they provide. This paper explicitly introduces financial instruments into the standard stochastic growth model with money and production and shows that the value of the firm in this case is equal to the firm’s capital stock divided by inflation. The resulting asset-pricing conditions indicate that the effect of inflation on asset returns differs from the effects found in other papers by the addition of a significant wealth tax.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund