- The difference between the value of
money and the cost to produce it
- Economic cost of producing a
currency within a given economy or
country
If
- Seigniorage is positive, then the
government will make an
ECONOMIC PROFIT
- Seigniorage is negative, will result in
an ECONOMIC LOSS
How the government earns from
printing money?
Seigniorage may be counted as
revenue for a government when the
money that is created is worth more
than it costs to produce it
revenue of the government is often
used by the governments to finance
portion of their expenditures without
having to collect tax
Example
- It costs the United States of America
government $0.05 to produce a $1
bill, the seigniorage is $0.95, or the
difference between the two amounts
- The difference between the cost of
printing new currency and the face
value of the same currency, it can
also be expressed as the amount of
goods or service a government can
acquire through the printing of the
new notes.
SEIGNIORAGE= Printing of New
Currency Face Value of the Same
Currency
STATE ENTERPRISE/
STATE OWNED
ENTERPRISE (SOE)
- Also called state-owned company,
state-owned entity, state enterprise,
publicly
owned
corporation,
government
business
enterprise,
crown
corporation,
governmentowned
corporation,
commercial
government agency, public sector,
parastatal
- A legal entity that undertakes
commercial activities on behalf of the
owner, the government
SOE in the Philippine Setting
- In the Philippines, state-owned enterprises
are known as government-owned and
controlled corporation
- A number of SOE created during the
Marcos Era under his New Society program
of crony capitalism, were privatized at the
end of the 20th and the beginning of the
21st century (Philippine Airlines, Philippine
Long Distance Telephone Company and
Philippine National Bank)
Examples of SOE in the
Philippines
Policies in Generating
Public Revenues
How does Fiscal Policy Works?
- Governments directly and indirectly
influence the way resources are used
in the economy. A basic equation of
national income accounting that
measures the output of an economy
or gross domestic product (GDP)
according to expenditures helps
show how this happens:
GROSS DOMESTIC
PRODUCT = C + I + G
+ NX
Where:
C Private Consumption
I Investment
G - purchases of goods and services by
the government
NX - exports minus imports (Net Exports)
Example:
Given the following data, compute for the Gross
Domestic Product.
- The Philippine Government have surveyed for the
last 2 years that the average consumption of
Filipinos has totaled to 33.3 M
- Imports to different countries totaled to 4.7 M
- Exports from different countries totaled to 9.8 M
- Government invests 87.45 M infrastructure,
railways, public schools that the Filipinos had
benefited
- Government has also bought different items which
will be used for the different govt projects totaling
to 55.78 M
