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Time-Consistent Private Supply of Outside Paper Money


Berentsen, Aleksander (2003). Time-Consistent Private Supply of Outside Paper Money. Working paper series / Institute for Empirical Research in Economics No. 156, University of Zurich.

Abstract

"Money *nAleksander BerentsennEconomics Departement, University of Basel, SwitzerlandnJune 10, 2003nAbstractnThis paper considers a monopolist’s supply of outside paper money in a random-matchingnmodel with divisible money and divisible goods. When binding supplynannouncements are feasible, the revenue-maximizing policy is characterized by anninitial period where the monopolist initiates a currency reform which destroys thenvalue of any old currency, and then issues new money, which the issuer taxes thereafternwith a constant gross growth rate of money. It is shown that this policy is time-consistentnif the trading history of the issuer is public information and if moneyndemanders respond to the relevation of defection by playing autarky."

Abstract

"Money *nAleksander BerentsennEconomics Departement, University of Basel, SwitzerlandnJune 10, 2003nAbstractnThis paper considers a monopolist’s supply of outside paper money in a random-matchingnmodel with divisible money and divisible goods. When binding supplynannouncements are feasible, the revenue-maximizing policy is characterized by anninitial period where the monopolist initiates a currency reform which destroys thenvalue of any old currency, and then issues new money, which the issuer taxes thereafternwith a constant gross growth rate of money. It is shown that this policy is time-consistentnif the trading history of the issuer is public information and if moneyndemanders respond to the relevation of defection by playing autarky."

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
Language:English
Date:June 2003
Deposited On:29 Nov 2011 22:32
Last Modified:27 Nov 2020 07:14
Series Name:Working paper series / Institute for Empirical Research in Economics
ISSN:1424-0459
OA Status:Green
Official URL:http://www.econ.uzh.ch/wp.html