Seigniorage in Europe
46 Pages Posted: 29 Jun 2004 Last revised: 6 Aug 2022
Date Written: November 1988
Abstract
In this paper, based on the experience of ten European countries, we study the relevance of seigniorage revenues in the recent past, and we speculate about their importance in the near future. We find that the members of the European community differ widely in the way they manage monetary policies. While for some of the European countries we could not identify any consistent seigniorage policy, for others seigniorage appears to have been an important component of their financing policies. This lack of consensus about the role of monetary policies is a potential source of conflict in designing common exchange rate policies. A formal analysis of the current status of the finances of the governments of the ten European countries also revealed that several of them are now following budget policies that are potentially incompatible with their long run solvency. This also represents a major obstacle toward monetary unification on exchange rate stability. Member countries will be faced with quite different needs for revenues and eliminating a (politically) flexible instrument like siegniorage may result in an unstable situation.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Economic, Political and Institutional Determinants of Public Deficits
By Jaejoon Woo
-
Explaining Fiscal Policies and Inflation in Developing Countries
By Sebastian Edwards and Guido Tabellini
-
Government Spending and Inflationary Finance: A Public Finance Approach
-
Does Political Instability Lead to Higher Inflation? A Panel Data Analysis
By Ari Aisen and Francisco José Veiga
-
The Political Economy of Seigniorage
By Francisco José Veiga and Ari Aisen