Senhoriagem e inflação: o caso brasileiro

Abstract

The paper analyses how the endogenous generation of seigniorage produces a non-explosive growth in public debt, even when the public deficits are persistent and the real interest rate is bigger than the rate of economic growth. The hypothesis that the demand for money has a double-logarithmic specification is tested against the specification suggested by Cagan, with a cost-elasticity increasing with the interest rate. The Cagan hypothesis is rejected in comparison to the double-logarithmic specification. For the whole array of interest rates empirically observed, the evidence indicates a cost elasticity smaller than one and an always increasing curve of inflationary tax collection. As a result, the welfare cost ofseigniorage collection does not tend to an asymptote, as in the Cagan's specification, but grows monotonically. As for inflation, since there is no "Laffer curve" for the inflationary tax, the Bruno-Fischer "double equilibrium" analysis of seigniorage collection can not be performed. Itis possible to demonstrate, following Barro and Gordon, that with discretionary decisions inflation rates are bigger than with economic policy rules.