MONETARY UNIONS AND THE EFFECTS OF SEIGNIORAGE SHARING

This paper examines the influence relative real income between countri es and the distribution of seigniorage have on the equilibrium inflati on rate. I find that the allocation of seigniorage influences the equi librium inflation rate when relative real income differs between count ries. When the allocation of seigniorage is from a ''rich'' country to a ''poor'' country, the equilibrium inflation rate increases. When th e allocation of seigniorage is from a ''poor'' country to a ''rich'' c ountry, the equilibrium inflation rate decreases.