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Optimality of the Friedman rule in economies with distorting taxes

Chari, VV; Christiano, LJ; Kehoe, PJ; (1993) Optimality of the Friedman rule in economies with distorting taxes. (NBER Working Paper 4443). National Bureau of Economic Research: Cambridge, Massachusetts, USA. Green open access

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Abstract

We find conditions for the Friedman rule to be optimal in three standard models of money. These conditions are homotheticity and separability assumptions on preferences similar to those in the public finance literature on optimal uniform commodity taxation. We show that there is no connection between our results and the result in the standard public finance literature that intermediate goods should not be taxed.

Type: Working / discussion paper
Title: Optimality of the Friedman rule in economies with distorting taxes
Open access status: An open access version is available from UCL Discovery
DOI: 10.3386/w4443
Publisher version: http://www.nber.org/papers/w4443
Language: English
Additional information: This is the published version of record. For information on re-use, please refer to the publisher’s terms and conditions. - Text has been published in the Journal of Monetary Economics, vol. 37, no. 2 (April 1996).
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
URI: https://discovery.ucl.ac.uk/id/eprint/10058597
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