One or two monies?
AbstractThe set of incentive-feasible allocations is examined in a dynamic quasi-linear environment where agents lack commitment and have private information over their idiosyncratic characteristics. When record-keeping is available, the first-best allocation is implementable in a set of sufficiently patient economies. When record-keeping is limited to one money, this set is strictly smaller--except when private information is absent. When record-keeping is expanded, but limited to two monies, the set of economies for which the first-best is implementable corresponds to that of record-keeping, even when private information is present. We further demonstrate that two monies are a perfect substitute for record-keeping.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Monetary Economics.
Volume (Year): 57 (2010)
Issue (Month): 4 (May)
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Web page: http://www.elsevier.com/locate/inca/505566
Record-keeping Money Private information Limited commitment Mechanism design;
Other versions of this item:
- F30 - International Economics - - International Finance - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
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