DP1121 Causality Implications of the Public-Finance Approach to Inflation and Seigniorage

Author(s):	Behzad Diba, Philippe Martin
Publication Date:	January 1995
Keyword(s):	Granger Causality, Inflation, Public Finance, Seigniorage
JEL(s):	E5, E6
Programme Areas:	International Macroeconomics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=1121

Recent empirical tests of dynamic optimal seigniorage models focus on their `smoothing' and long-run implications. The models also imply that the optimal policies are forward looking; that is seigniorage revenues depend on expected future government expenditures. We report causality tests of forward-looking policies for Germany, France, Italy, the United Kingdom and the United States.