American Economic Review Vol. 82 No. 3 1992
Seigniorage and Political Instability
Abstract
The importance of seigniorage relative to other sources of government revenue differs markedly across countries. This paper tries to explain this regularity by studying a political model of tax reform. The model implies that countries with a more unstable and polarized political system will have more inefficient tax structures and, thus, will rely more heavily on seigniorage. This prediction of the model is tested on cross-sectional data for 79 countries. We find that, after controlling for other variables, political instability is positively associated with seigniorage.
- Volume
- 82
- Issue
- 3
- Pages
- 537-555
- Sources
- bibtex:phds-export.bib