The optimum quantity of money rule in the theory of public finance
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This paper examines optimal tax policy in a monetary economy in which money serves as an intermediate good that helps facilitate the conversion of scarce resources into final consumption goods by enabling consumers to economize on the costs of transacting. It is shown that in such an environment, even though distorting taxes must be levied for revenue purposes, the optimal tax structure calls for abstaining from inflationary finance and adopting the optimum quantity of money rule. © 1986.
Published Version (Please cite this version)10.1016/0304-3932(86)90040-1
Publication InfoKimbrough, KP (1986). The optimum quantity of money rule in the theory of public finance. Journal of Monetary Economics, 18(3). pp. 277-284. 10.1016/0304-3932(86)90040-1. Retrieved from https://hdl.handle.net/10161/1978.
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Professor of Economics
Professor Kimbrough specializes in the fields of macroeconomics and international economics. His latest research explores the revenue maximizing inflation rate, optimal taxes and tariffs in the presence of private information, the welfare costs of inflation, and interest rate rules and uniqueness in the presence of transactions costs. In prior work he has investigated the macroeconomic effects of trade policy, the impact of bilateral tariffs, foreign exchange controls and capital controls, the