Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152593
Authors: 
Monnet, Cyril
Year of Publication: 
2002
Series/Report no.: 
ECB Working Paper 159
Abstract: 
In most countries, the supply of paper money is controlled by a state institution. This paper provides an explanation for why such an arrangement is typically chosen. I use a deterministic matching model with a continuum of agents where enforcement is limited and where some agents produce public goods. Agents can also, at a cost, produce a distinguishable, intrinsically useless but perfectly durable good: notes. I call a note public if it is printed by an agent who produces public goods. In this framework, I prove that the socially optimal allocation is only implemented by a pattern of trade in which exchanges are effected using public notes.
Subjects: 
Limited Commitment
Money
JEL: 
D8
E5
Document Type: 
Working Paper

Files in This Item:
File
Size
386.69 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.