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Those principles note that seignorage is a potential source of revenue to any government, and hence tell us that the question of how much, if any, revenue should be raised from the inflation tax ought not to be settled in isolation from the design of the tax-expenditure system as a whole.
They are of the view that inflation is a fiscal driven phenomenon because fiscal authority moves first and sets the budget independently about revenue generation through government bonds and seignorage. In such situation government will sooner or later monetise this budget deficit which will lead to inflation.
Moreover, the integration of capital markets provided by a monetary union reduces risk premia, lowers the demand for international reserves and, consequently, generates a seignorage gain for countries in the area.
Also, for countries that, for good or ill, rely in an important way on seignorage revenue, seignorage revenue can be obtained by a paper currency interest rate below the target rate, regardless of the inflation rate in the electronic unit of account.
"Steady States in the OLG Model with Seignorage and Long-Lived Agents." Research in Economics, 57, 2003, 371-81.
Seignorage is the ability of a nation whose currency acts as the world's reserve currency to extort financial rents from the rest of the world via running persistent trade deficits and devaluing its currency over time.
These resources are classified as debt, other capital receipts, foreign aid and other unilateral grants, non-tax revenue including resource rents, seignorage, and taxes.
Los historiadores economicos han senalado que los agents tienen incentivos para llevar moneda de antiguo cuno a la ceca "so long as their face value before deduction of seignorage was less than the price in newly minted coin which the Mint paid to a tender or their weight in fine silver" (25).
Inflation reduces the fiscal effort associated with debt reduction; hence the devolution of monetary sovereignty to a supernational central bank guarantees against abuses of "seignorage".
The issuers of international currency enjoy the privilege to extract seignorage revenue from printing the currency like the national central banks do.
The US current account deficit and the US Treasury's "benign neglect" (a euphemism for Lord Keynes's concept of monetary seignorage) is also dollar negative.
The US dollar, while a beneficiary of Lord Keynes's seignorage and the world's biggest debt capital markets, is constrained by the Bernanke Fed.