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A FISCAL THEORY OF GOVERNMENT'S ROLE IN MONEY
Author(s) -
Selgin George,
White Lawrence H.
Publication year - 1999
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1999.tb01422.x
Subject(s) - economics , monopoly , government (linguistics) , commodity , production (economics) , substitution (logic) , revenue , market failure , fiat money , government revenue , public finance , money creation , government failure , monetary economics , macroeconomics , neoclassical economics , public economics , microeconomics , market economy , finance , monetary policy , central bank , linguistics , philosophy , computer science , programming language
As an alternative to market failure explanations, we draw on theory and historical evidence to argue that fiscal considerations explain the roles governments typically play in producing and regulating money. Public monopoly production of coins and banknotes, substitution offiat for commodity standards, and restrictions on substitutes for government money all generate revenue and especially provide means for meeting fiscal emergencies. We argue that these arrangements do not reflect conscious design so much as the evolutionary survival of the fiscally advantageous. ( JEL E5, E6, H1, N1)