Can currency competition work?
Can competition among privately-issued fiat currencies work? Only sometimes and partially. To show this, we build a model of competition among privately-issued fiat currencies. A purely private arrangement fails to implement an efficient allocation, even though it can deliver price stability under c...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Elsevier B.V.
2019
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| Subjects: | |
| Online Access: | View Fulltext in Publisher |
| Summary: | Can competition among privately-issued fiat currencies work? Only sometimes and partially. To show this, we build a model of competition among privately-issued fiat currencies. A purely private arrangement fails to implement an efficient allocation, even though it can deliver price stability under certain technological conditions. Although currency competition creates problems for monetary policy, it is possible to design a policy rule that uniquely implements an efficient allocation. © 2019 Elsevier B.V. |
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| ISBN: | 03043932 (ISSN) |
| DOI: | 10.1016/j.jmoneco.2019.07.003 |