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When and why hyperinflating monetary authorities abandon a currency

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  • Miller, Stephen Matteo

Abstract

Hyperinflating monetary authorities occasionally abandon the currency with delay to extract remaining seignorage. Modeling the monetary authority as an exhaustible resource extracting monopolist shows the delay increases with higher remaining seignorage or real interest rates or lower seignorage maximizing rates.

Suggested Citation

  • Miller, Stephen Matteo, 2016. "When and why hyperinflating monetary authorities abandon a currency," Economics Letters, Elsevier, vol. 141(C), pages 11-14.
    • Handle: RePEc:eee:ecolet:v:141:y:2016:i:c:p:11-14
    DOI: 10.1016/j.econlet.2016.01.017
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    References listed on IDEAS

    as
    1. Peter Bernholz, 2003. "Monetary Regimes and Inflation," Books, Edward Elgar Publishing, number 2873.
    2. Brennan, Geoffrey & Buchanan, James, 1981. "Revenue Implications of Money Creation under Leviathan," American Economic Review, American Economic Association, vol. 71(2), pages 347-351, May.
    3. Selgin, George & White, Lawrence H, 1999. "A Fiscal Theory of Government's Role in Money," Economic Inquiry, Western Economic Association International, vol. 37(1), pages 154-165, January.
    4. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39, pages 137-137.
    5. White, Eugene Nelson, 1995. "The French Revolution and the Politics of Government Finance, 1770–1815," The Journal of Economic History, Cambridge University Press, vol. 55(2), pages 227-255, June.
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    Cited by:

    1. Miller, Stephen Matteo & Ndhlela, Thandinkosi, 2020. "Money demand and seignorage maximization before the end of the Zimbabwean dollar," Journal of Macroeconomics, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Monetary Leviathan; Optimal stopping time; Seignorage maximization;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue

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