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| Author: | Faig, M. |
| Title: | The optimal structure of liquidity provided by a self-financed central bank |
| Journal: | Journal of Money, Credit and Banking
2000 : NOV, VOL. 32:4 PART 1, p. 746-765 |
| Index terms: | LIQUIDITY FINANCE CENTRAL BANKS |
| Language: | eng |
| Abstract: | Self-financed central banks, without capital and taxes, cannot pay the return on both capital and national debt. The gaps between the returns on capital and public securities are implicit taxes, which are shifted forward to commodities that people finance with these securities. Because taxes on investment are less efficient than taxes on consumption, the national debt should earn interest if people use it to finance expenditures that are investment intensive. |
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