Cover von: Explosive Hyperinflation, Inflation-Tax Laffer Curve, and Modeling the Use of Money
Jesús Vázquez, María-José Gutiérrez

Explosive Hyperinflation, Inflation-Tax Laffer Curve, and Modeling the Use of Money

Rubrik: Articles
Jahrgang 160 (2004) / Heft 2, S. 311-326 (16)
Publiziert 09.07.2018
DOI 10.1628/0932456041438786
Veröffentlicht auf Englisch.
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Beschreibung
This paper analyzes the existence of an inflation-tax Laffer curve (ITLC) in the context of two optimizing monetary models. Explosive hyperinflation rules out the presence of an ITLC. In a cash-in-advance economy, this paper shows that explosive hyperinflation is possible and thus an ITLC is ruled out whenever the relative risk aversion parameter is greater than one. In a money-in-the-utility-function model, it is shown that (i) an ITLC is also ruled out and (ii) explosive hyperinflations are more likely when the transactions role of money is more important.