Inflation versus Taxation: Representative Democracy and Party Nominations
1994 (English)Report (Other academic)
The trade-off between inflation and taxation is analysed in a model with heterogeneity in nominal debt holdings. This creates a political conflict among the electorate. As a benchmark we study a "completely representative" democracy, where more inequality leads to higher equilibrium inflation. Extensions include a more realistic two-party nomination system and real money balances in the utility function. Special attention is drawn to the sources of multiple politico-economic equilibria. Finally, an explicit comparison with the capital-levy problem is made.
Place, publisher, year, edition, pages
Stockholm: IIES , 1994. , 27 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 577
inflationary taxation, inequality, median voter, representative democracy, party nominations
IdentifiersURN: urn:nbn:se:su:diva-41901OAI: oai:DiVA.org:su-41901DiVA: diva2:342850
Published in connection with a visit at the IIES.2010-08-112010-08-112010-08-11