Working Paper: CEPR ID: DP1121
Authors: Behzad T. Diba; Philippe Martin
Abstract: 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.
Keywords: seigniorage; inflation; public finance; Granger causality
JEL Codes: E5; E6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| seigniorage revenues (H29) | future government expenditures (H59) |
| future government expenditures (H59) | seigniorage revenues (H29) |
| seigniorage revenues (H29) | government expenditures (H59) |
| government expenditures (H59) | seigniorage revenues (H29) |