Document Type : Research Paper

Authors

• Reza i Moosavi Mohsen ¹
• Haideh Norouzi ²

¹ Ph.D. in Economics and Lecturer, Islamic Azad University, Shiraz Branch

² M.S. in Economics and Lecturer, University of Applied Sciences, Kazeroon Center

Abstract

This paper investigates the inflation tax. Laffer Curve surfaces of inflation tax have
been estimated in Iran, using time series data for the period 1961-2006. Considering the high
inflation ratio of iran during the last three decades, it is hypothesized that iran operates in
fourth region of the Laffer curve surface. In this research, Cagan!s money demand function
is used. Also, we consider an explicit role for the reserve ratio and it introduced inflation and
required reserve ratio as locus of instruments which maximize the inflation tax. Results of
this survey show that Iran operates in right side of the Laffer curve surfaces (region I) and
inflation tax maximize at the highest inflation rate.

Keywords

• Inflation Tax
• Laffer Surface
• Cagan Function
• Inflation
• Reserve Ratio