Samuelson's consumption-loan model with country-specific fiat monies
AbstractIn this paper, we examine various exchange rate regimes, paying particular attention to what difference the monetary-fiscal policy choices of governments make. The exchange rate may be market-determined or fixed, and if fixed, either cooperatively or by one government alone. Further, capital controls may or may not apply. Our most important result, quite general, we believe, is that absent capital controls the equilibrium exchange rate of the floating rate regime is indeterminate. It makes no sense to advocate floating rates and unfettered international borrowing and lending.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 24.
Date of creation: 1978
Date of revision:
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- Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
- Kareken, John & Wallace, Neil, 1977. "Portfolio autarky: A welfare analysis," Journal of International Economics, Elsevier, vol. 7(1), pages 19-43, February.
- Neil Wallace, 1977. "On simplifying the theory of fiat money," Staff Report 22, Federal Reserve Bank of Minneapolis.
- Gale, David, 1974. "The trade imbalance story," Journal of International Economics, Elsevier, vol. 4(2), pages 119-137, May.
- John Bryant, 1978. "Transactions demand for money," Staff Report 38, Federal Reserve Bank of Minneapolis.
- David A. Hsieh, 1982. "International Risk Sharing and the Choice of Exchange-Rate Regime," NBER Working Papers 0842, National Bureau of Economic Research, Inc.
- Thomas J. Sargent, 1981. ""Dollarization," seignorage, and the demand for money," Working Papers 170, Federal Reserve Bank of Minneapolis.
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