| The dissertation is comprised of three chapters. The first chapter is Seigniorage when Government Bonds Provide Liquidity Services. This paper introduces a new theoretical model that shows government bond seigniorage is part of an optimal tax program using an extended money-in-utility model where both money and government bonds are allowed to provide liquidity services. The framework determines a new set of solutions on the optimal levels of real money balances and government debt, the optimal combination of tax rates, and consequently, the money seigniorage and government bond seigniorage.;The second chapter is Government Bond Seigniorage, Money Seigniorage and Their Correlation with Monetary Policy. This chapter empirically examines the value and importance of government bond seigniorage in comparison with money seigniorage, and investigates the impact of monetary policy on seigniorage for five countries (United States, Canada, France, Australia and Italy) over the period of 1959--2001. There are two main findings. First, compared with money seigniorage, government bond seigniorage accounts for a larger percentage of GDP on average but fluctuates more. Second, applying a VAR analysis, we find that both government bond seigniorage and money seigniorage decline in the face of a monetary contraction and rise in response to a monetary expansion.;The third chapter is Empirical Investigations of Inflation Targeting. This chapter empirically investigates two issues using a dataset of 66 countries for the period of 1980--2000: factors that are systematically associated with a country's choice of inflation targeting as its monetary framework; and the impact of inflation targeting on the performance of inflation and output and on the trade-off between inflation and output variability.;The empirical results are informative and encouraging. We find a number of variables are significantly associated with the choice of inflation targeting. After adopting inflation targeting, both performance of inflation and output improved in the inflation targeting countries, however, there is no strong evidence that inflation targeting plays a beneficial role on inflation and output, compared with the contemporary experience of non-inflation targeters. We also find limited support for the proposition that the adoption of inflation targeting improves the trade-off between inflation and output variability. |
