Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333270 
Year of Publication: 
2023
Citation: 
[Journal:] Journal of Economics and Statistics [ISSN:] 2366-049X [Volume:] 243 [Issue:] 2 [Year:] 2023 [Pages:] 153-167
Publisher: 
De Gruyter Oldenbourg, Berlin
Abstract: 
The coexistence of fiat money (cash) and digital monies constitutes a system of parallel currencies as media of exchange. This paper asks whether a new (digital) currency is essential: Does a new currency allow for a better resource allocation even if a fully accepted currency is in circulation and remains in circulation? Using the dual currency search model of Kiyotaki and Wright (1993. A search-theoretic approach to monetary economics. Am. Econ. Rev. 83: 63-77), we show how the introduction of a secondary currency affects average utility. There is some scope for a welfare improvement as the welfare effect depends on differences in returns and costs, and, in particular, on the proportion of cash traders who will be replaced by digital money traders.
Subjects: 
digital money
dual currency regime
welfare comparison
JEL: 
E41
E42
E51
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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