Synthetic money

This paper provides a methodology for constructing synthetic money, which is defined as an optimal currency basket that mimics a single currency. Empirical evidence is provided by constructing a synthetic dollar from a currency basket comprised of six currencies that excludes the U.S. dollar. We believe that synthetic money has a number of practical applications, including currency pegging operations by nations, denomination of global bond issues by large firms and countries, and analyses of currency movements over time by interested parties.     

有人说蒂米什瓦拉是罗马尼亚的上海,我想说我们可以做得更好!

虽然蒂米什瓦拉与中国相距甚远，但我们非常关注中国近几年来的发展变化。同样，我们也非常期待中国将会选择什么样的发展道路。     

My money or yours: house money payment effects

This paper reports the results of an experiment designed to study how subjects’ decision making may be affected by the timing of participation payments (or show-up fees). The experiment follows Davis et al. (J. Econ. 30:69–95, 2004) where subjects were asked to make a sequential purchase decision and were given the opportunity to purchase information about the value of a good prior to a decision to purchase the good itself. There, subjects purchased information less often than expected which was interpreted as risk-seeking behavior. Here, we test a payment hypothesis by varying the timing of the participation payment. Payment of a show-up fee before the decision-making stages of the experiment increases information purchase, which we interpret as an increase in risk-averse behavior.     

Bidding for money

We analyze monetary exchange in a model that allows for directed search and multilateral matches. We consider environments with divisible goods and indivisible money, and compare the results with those in models that use random matching and bilateral bargaining. Two different pricing mechanisms are used: ex ante price posting, and ex post bidding (auctions). Also, we consider settings both with and without lotteries. We find that the model generates very simple and intuitive equilibrium allocations that are similar to those with random matching and bargaining, but with different comparative static and welfare properties.     

Essential interest-bearing money

I examine optimal monetary policy in a Lagos and Wright [R. Lagos, R. Wright, A unified framework for monetary theory and policy analysis, J. Polit. Economy 113 (2005) 463-484] model where trade is centralized and all exchange is voluntary. I identify a class of incentive-feasible policies that improve welfare beyond what is achievable with zero intervention. Any policy in this class necessarily entails a non-negative inflation rate and a strictly positive nominal interest rate. Despite the absence of a lump-sum tax instrument, there exists an incentive-feasible policy that implements the first-best allocation.     

Optimal divisibility of money when money is costly to produce

There is wide agreement that currency was not available in conveniently small denominations prior to the 19th century. Here, estimates of the costs of providing and maintaining money (coins) in 15th century Europe and parameterized versions of a matching model of money are used to find the optimal degree of divisibility. Although the optima are sensitive to the specification of the matching model, the optimal sizes we find agree in order of magnitude with the sizes of the most common coins in 15th century Europe.     

Hicks on monetary theory and history: money as endogenous money

Hicks was never tired of saying that monetary theory is in history.What he meant was that monetary theory is intrinsically relatedto real events, and more importantly that monetary issues needto be analysed in a dynamic sequential context in which timeplays an essential part. He went on developing a particularsequential analysis: the study of what happens within a singleperiod (‘single-period theory’) and the study ofthe linkages between a succession of those periods (‘continuationtheory’). It is suggested that this distinction providesa useful lesson for modern endogenous money theorists.     

Mises and his money

The Review of Austrian Economics - When he arrived in the US, Ludwig von Mises faced financial difficulties and had to find new sources of income. I use archival material to build on the existing...     

Time is not money

In an ultimatum bargaining experiment, we study how subjects bargain over the returns to their investments of money and time. The most notable finding is that a third of the subjects demand no compensation for their time investments, whereas almost all subjects demand compensation for equally costly monetary investments.     

Indirect reciprocity and money

Using an experimental analysis of a simple monetary economy as a basis, we argue that a monetary system can be more stable than one would expect from individual rationality. We show that positive reciprocity stabilizes the monetary system, provided every participant considers the feedback of his choice to the stationary equilibrium. If, however, the participants do not play stationary strategies and some participants notoriously refuse to accept money, then due to negative reciprocity their behavior will eventually induce a break-down of the monetary system.     

Standardization in electronic money

Abstract

Electronic money services are provided by the combination of Integrated Circuit (IC) cards and terminals. The compatibility of different brands of electronic money can be enabled by firms' joint adoption of standard terminals. In this paper, we analyse the effect of achieving compatibility among different brands of electronic money. We show that, if the unit production cost of a standard terminal is not so much different from that of a non-standard one, firms' joint adoption of standard terminals will increase the total sales of IC cards and the network size of terminals, thus raising consumers' surplus and firms' profits. On the other hand, if the unit cost of a standard terminal is so high that firms are discouraged from voluntarily adopting standard ones, the government may employ subsides to enhance efficiency. However, if the duty of implementing standardization is placed solely on the firms without subsidies, all the agents, including consumers and retailers, will be left worse off.     

Global money market interrelationships

This study extends the literature dealing with money market interrelationships by analyzing the behavior of yields on assets denominated in five major world currencies in three different geographic markets within a multivariate cointegration framework. Basic findings include: (1) same currency money market yields are cointegrated across countries; (2) domestic markets and the Eurocurrency markets are closely linked, as are the Eurocurrency markets and the Asian currency markets; (3) the relationships between domestic markets and the Asian offshore markets are the weakest of those tested; and (4) only one common factor in three geographic markets indicates a global market, whereas significant causal effects suggest that a degree of market segmentation remains.