This is in considerable contrast with a common image in other regions that authorities gained profits from seigniorage.
A larger or more patient government considers at a greater extent the aggregate externality of issuing money, and hence must offset the seigniorage benefits.
Therefore, for a given price, the impatient government maximizes seigniorage by issuing money as rapidly as possible.
Any seigniorage revenues s are assumed to be redistributed to young consumers in the form of a lump-sum transfer.
For instance, a larger government coalition internalizes at a greater extent the aggregate externality of issuing money, and hence enjoys less seigniorage.
In equation (13), an increase in causes a decrease in the seigniorage benefits.
A currency board would be the next desirable choice because seigniorage is retained, but national control of monetary policy is effectively surrendered.
To achieve credibility, the government must offset the benefits of seigniorage by internalizing some of the aggregate externalities generated by the issue of fiat money.
