Advanced Search
MyIDEAS: Login to save this paper or follow this series

May the Worst Commodity Standard be the Best? A Re-enactment of "The Crimes of 1873"

Contents:

Author Info

  • Juan-Manuel Renero

    (Centro de Investigacion y Docencia Economicas)

Registered author(s):

    Abstract

    This paper establishes new existence and welfare results for the Kiyotaki-Wright model [1989] considering mixed strategies that do not restrict agents to play a unique strategy for each opportunity set. For a general version of the model, I construct many stable equilibria in which goods with poor storage properties are widely accepted while better goods are less accepted. Furthermore, I show that these equilibria may be socially desirable because more trade occurs that in the alternative equilibria in which better goods are those which are widely accepted. The nontechnical intuition is that if intrinsically attractive objects have great acceptance, people would be very reluctant to trade them away. In contrast, if intrinsically unattractive objects are the objects that are widely accepted, people would be less reluctant to trade them away and, consequently, more trade may occur. By analogy, those results may be helpful in analyzing historical episodes in which a society faced the choice of a commodity standard; say, the election between a gold standard and a silver standard. For instance, my welfare results may help us to evaluate the controversial rush after 1867 to adopt the gold standard, the appreciating standard, by the great commercial nations of the time. In fact, we may have a reconstruction in a general equilibrium model of the so-called crimes of 1873 in US and France (see Friedman [1990 b] and Flandreau [1996]). That is, my results may suggest that keeping (as in China, India, Mexico, etc.) the silver standard, the depreciating standard, was a sound economic policy decision as discussed for some protagonists. Therefore, we may have some support to the alleged claim of some silver advocates that the "worst standard was the best;" that is, perhaps with more precision, that the intrinsically worst commodity standard may be the socially best one.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://fmwww.bc.edu/RePEc/es2000/1522.pdf
    File Function: main text
    Download Restriction: no

    Bibliographic Info

    Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1522.

    as in new window
    Length:
    Date of creation: 01 Aug 2000
    Date of revision:
    Handle: RePEc:ecm:wc2000:1522

    Contact details of provider:
    Phone: 1 212 998 3820
    Fax: 1 212 995 4487
    Email:
    Web page: http://www.econometricsociety.org/pastmeetings.asp
    More information through EDIRC

    Related research

    Keywords:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Kehoe, Timothy J & Kiyotaki, Nobuhiro & Wright, Randall, 1993. "More on Money as a Medium of Exchange," Economic Theory, Springer, Springer, vol. 3(2), pages 297-314, April.
    2. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 927-54, August.
    3. Renero, Juan-Manuel, 1999. "Does and Should a Commodity Medium of Exchange Have Relatively Low Storage Costs?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 251-64, May.
    4. Juan-Manuel Renero, 1998. "Unstable and stable steady-states in the Kiyotaki-Wright model," Economic Theory, Springer, Springer, vol. 11(2), pages 275-294.
    5. Aiyagari, S Rao & Wallace, Neil, 1992. "Fiat Money in the Kiyotaki-Wright Model," Economic Theory, Springer, Springer, vol. 2(4), pages 447-64, October.
    6. Aiyagari, S Rao & Wallace, Neil, 1991. "Existence of Steady States with Positive Consumption in the Kiyotaki-Wright Model," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(5), pages 901-16, October.
    7. Marimon, Ramon & McGrattan, Ellen & Sargent, Thomas J., 1990. "Money as a medium of exchange in an economy with artificially intelligent agents," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 14(2), pages 329-373, May.
    8. Aiyagari, S. Rao & Wallace, Neil, 1997. "Government Transaction Policy, the Medium of Exchange, and Welfare," Journal of Economic Theory, Elsevier, Elsevier, vol. 74(1), pages 1-18, May.
    9. Friedman, Milton, 1990. "Bimetallism Revisited," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 4(4), pages 85-104, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ecm:wc2000:1522. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.