Ownership of Capital in Monetary Economies and the Inflation Tax on Equity

Author/Editor:

Thomas F. Cosimano ; Ralph Chami ; Connel Fullenkamp

Publication Date:

December 1, 1999

Electronic Access:

Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Financial instruments are subject to inflation taxes on the wealth they represent and on the nominal income flows they provide. This paper explicitly introduces financial instruments into the standard stochastic growth model with money and production and shows that the value of the firm in this case is equal to the firm’s capital stock divided by inflation. The resulting asset-pricing conditions indicate that the effect of inflation on asset returns differs from the effects found in other papers by the addition of a significant wealth tax.

Series:

Working Paper No. 99/167

English

Publication Date:

December 1, 1999

ISBN/ISSN:

9781451858167/1018-5941

Stock No:

WPIEA1671999

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

44

Please address any questions about this title to publications@imf.org