Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-27T21:53:20.207Z Has data issue: false hasContentIssue false
  • English
  • Français

DYNAMIC SEIGNIORAGE THEORY

An Exploration

Published online by Cambridge University Press:  02 March 2005

MAURICE OBSTFELD
MAURICE OBSTFELD
Affiliation:
University of California, Berkeley National Bureau of Economic Research and Centre for Economic Policy Research
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper develops a dynamic model of seigniorage in which economies' equilibrium paths reflect the ongoing strategic interaction between an optimizing government and a rational public. The model extends existing positive models of monetary policy and inflation by explicitly incorporating the intertemporal linkages among budget deficits, debt, and inflation. A central finding is that the public's rational responses to government policies may well create incentives for the government to reduce inflation and the public debt over time. A sufficiently myopic government may, however, provoke a rising equilibrium path of inflation and public debt.

Keywords

SeigniorageDynamic GamesTime ConsistencyMarkov Perfect Equilibrium
Type
Research Article
Information
Macroeconomic Dynamics , Volume 1 , Issue 3 , September 1997 , pp. 588 - 614
Copyright
© 1997 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)