Creator: Wallace, Neil and Zhou, Ruilin Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 569 Abstract:
Until the mid-19th century, shortages of currency were sometimes serious problems. One common response was to prohibit the export of coins. We use a random matching model with indivisible money to explain a shortage and to judge the desirability of a prohibition on the export of coins. The model, although extreme in many regards, represents better than earlier models a demand for outside money and the problems that arise when that money is indivisible. It can also rationalize a prohibition on the export of coins.
Stichwort: Currency shortage, Indivisible money, and Export of coins Fach: E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems, E40 - Money and Interest Rates: General, and N10 - Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: General, International, or Comparative
Creator: Zhou, Ruilin Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 222 Abstract:
This paper investigates the characteristics of stationary single-price equilibrium in a monetary random-matching model where agents can hold an arbitrary amount of divisible money and where production is costly. At such an equilibrium, agents’ money holdings are endogenously determined and uniformly bounded. A refinement of weakly undominated strategies is argued to be necessary. It is shown that a continuum of single-price equilibria indexed by the aggregate real-money balance exists if one such equilibrium exists. Equilibria with different money-holdings upper bounds, hence different distributions, but with identical aggregate real-money balances, can coexist.
Fach: D51 - Exchange and Production Economies and E40 - Money and Interest Rates: General