Seigniorage versus inflation tax: a comment

Abstract

This paper is a comment on an article by de Haan et al. (1993) on seigniorage in developing countries. It is argued that de Haan et al. conflate the concepts of seigniorage and inflation tax, although it is now established that these two concepts are distinct. Furthermore, the measures they employ to calculate inflation tax and seigniorage are questioned. Examples suggest that they systematically overestimate seigniorage and miscalculate the inflation tax.