Skip to main content

Seigniorage as a Tax: A Quantitative Evaluation

Staff Report 132 | Published January 1, 1991

Download PDF


Edward C. Prescott Senior Monetary Advisor
Ayse Imrohoroglu Visiting Scholar, Institute
Seigniorage as a Tax: A Quantitative Evaluation


In this paper we analyze the efficacy of seignorage as a tax associated with various monetary arrangements in a computable general equilibrium model. For the economies examined, we find that seignorage tax is not a good one relative to a tax on labor income. If the after-tax real return is –5 percent, as it was in the 1974–1978 period, welfare is approximately 0.5 percent of consumption lower than it would be if the after-tax return were zero.

Published in: _Quarterly Review_ (Vol. 15, No. 3, Summer 1991, pp. 3-10) Published in: _Journal of Money, Credit, and Banking_ (Vol. 23, No. 3, August 1991, pp. 462-475)