A fiscal theory of money and bank liquidity provision

• 成果类型: Article
• 署名作者: He, Ping; Liu, Zehao; Xie, Chengbo
• 署名单位: Tsinghua University; Renmin University of China; Southwestern University of Finance & Economics - China
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2023.105744
• 发表日期: 2023
• 关键词: Liquidity shortage; fiscal policy; banking; Fiat money; Side trades

摘要

Fiscal-backed money can provide additional liquidity to consumers and mitigate the liquidity shortage problem in an economy with banks where agents face idiosyncratic liquidity shocks without being fully insured. The government issues fiat money and creates real value for money by levying a tax and accepting money for tax payments. Tax reallocates the distribution of liquidity in the economy. An increase in tax, by increasing fiscal surplus and the real value of money, reduces the equilibrium investment. Additionally, imposing taxes influences the incentive of private information production, which may impose a constraint on optimal fiscal policy. (c) 2023 Elsevier Inc. All rights reserved.