Private money, settlement, and discount : a comment
AbstractTemzelides and Williamson present a model of private currency issuance to study the effect of clearing arrangements on the prices at which private currencies trade, on the volume of exchange, and on welfare. Their findings hinge on three factors: the location of the issuers relative to the area in which their currencies circulate, whether there is an arrangement for clearing nonlocally issued currencies, and whether agents are fully informed about the quality of the currencies. This paper finds that the Temzelides-Williamson model provides valuable insights about historical experiences with private paper monies, but it raises more questions than it answers regarding electronic currencies. The model can, however, serve as a useful point of departure for further research.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number RWP 00-01.
Date of creation: 2000
Date of revision:
Other versions of this item:
- Schreft, Stacey L., 2001. "Private money, settlement, and discount A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 54(1), pages 109-115, June.
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- Dean Corbae & Ted Temzelides & Randall Wright, 2002. "Matching and Money," American Economic Review, American Economic Association, vol. 92(2), pages 67-71, May.
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