Central bank digital currency, tax evasion, and inflation tax

【Author】 Kwon, Ohik; Lee, Seungduck; Park, Jaevin

【Source】ECONOMIC INQUIRY

【影响因子】1.710

【Abstract】Can introducing a central bank digital currency (CBDC) improve social welfare? We construct a dual currency model to study whether CBDC with a record-keeping technology can reduce tax evasion incentives in cash transactions and further achieve better allocations than a cash-only economy with respect to fiscal arithmetic. We show that when there is inefficiency associated with tax evasion in cash transactions, introducing CBDC with strictly positive interest can remove the inefficiency and thus improve welfare by discouraging tax evasion and rewarding tax payments. This beneficial effect of the CBDC depends on the central bank's fiscal role.

【Keywords】cash; central bank digital currency; inflation tax; monetary policy; tax evasion

【发表时间】

【收录时间】2022-05-29

【文献类型】实证性文章

【主题类别】

区块链应用-虚拟经济-金融领域