Cover Image

Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector

Governments in developing economies often resort to taxing bank money balances through imposition of high reserve requirements and also by relying on seigniorage to finance their deficits. In the context of those practices, this research attempts to answer the following questions. First, why do deve...

Full description

Saved in:
Bibliographic Details
Main Author: Ali, Hamid E.
Format: Article
Language:English
Published: Universiti Utara Malaysia 2011
Subjects:
HG Finance
Online Access:http://repo.uum.edu.my/25047/1/IJBF%208%201%202011%2021%2034.pdf
http://repo.uum.edu.my/25047/
http://ijbf.uum.edu.my/index.php/previous-issues/141-the-international-journal-of-banking-and-finance-ijbf-vol-8-no-1-march-2011
Tags: Add Tag
No Tags, Be the first to tag this record!
id my.uum.repo.25047
record_format eprints
spelling my.uum.repo.250472018-10-25T02:17:47Z http://repo.uum.edu.my/25047/ Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector Ali, Hamid E. HG Finance Governments in developing economies often resort to taxing bank money balances through imposition of high reserve requirements and also by relying on seigniorage to finance their deficits. In the context of those practices, this research attempts to answer the following questions. First, why do developing economies with an informal sector resort to inflationary measures to finance their activities? Second, how does a government induce an agent to choose the formal economy? As to the first question on the trade-off between inflation and reserve requirements, it is shown that of maximum inflation and minimum reserve requirements will increase the steady-state utility of an optimizing agent. Regarding the second question, the agents prefer the informal economy if policy relies on a maximum reserve requirement. Universiti Utara Malaysia 2011 Article PeerReviewed application/pdf en http://repo.uum.edu.my/25047/1/IJBF%208%201%202011%2021%2034.pdf Ali, Hamid E. (2011) Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector. The International Journal of Banking and Finance, 8 (1). pp. 21-34. ISSN 1617-722 http://ijbf.uum.edu.my/index.php/previous-issues/141-the-international-journal-of-banking-and-finance-ijbf-vol-8-no-1-march-2011
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutionali Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Ali, Hamid E.
Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector
description Governments in developing economies often resort to taxing bank money balances through imposition of high reserve requirements and also by relying on seigniorage to finance their deficits. In the context of those practices, this research attempts to answer the following questions. First, why do developing economies with an informal sector resort to inflationary measures to finance their activities? Second, how does a government induce an agent to choose the formal economy? As to the first question on the trade-off between inflation and reserve requirements, it is shown that of maximum inflation and minimum reserve requirements will increase the steady-state utility of an optimizing agent. Regarding the second question, the agents prefer the informal economy if policy relies on a maximum reserve requirement.
format Article
author Ali, Hamid E.
author_facet Ali, Hamid E.
author_sort Ali, Hamid E.
title Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector
title_short Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector
title_full Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector
title_fullStr Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector
title_full_unstemmed Optimal Inflationary and Reserve Requirement Policies: A Study of an Economy with an Informal Sector
title_sort optimal inflationary and reserve requirement policies: a study of an economy with an informal sector
publisher Universiti Utara Malaysia
publishDate 2011
url http://repo.uum.edu.my/25047/1/IJBF%208%201%202011%2021%2034.pdf
http://repo.uum.edu.my/25047/
http://ijbf.uum.edu.my/index.php/previous-issues/141-the-international-journal-of-banking-and-finance-ijbf-vol-8-no-1-march-2011
_version_ 1644284211162513408
score 13.211869

Similar Items