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International Seigniorage Payments

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Author Info
Benjamin Eden () (Department of Economics, Vanderbilt University)

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Abstract

What are the "liquidity services" provided by ìover-pricedî assets? How do international seigniorage payments affect the choice of monetary policies? Does a country gain when other hold its ìover-pricedî assets? These questions are analyzed here in a model in which demand uncertainty (taste shocks) and sequential trade are key. It is shown that a country with a relatively stable demand may issue "over priced" debt and get seigniorage payments from countries with unstable demand. But this does not necessarily improve welfare in the stable demand country.

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File URL: http://www.vanderbilt.edu/Econ/wparchive/workpaper/vu06-w22.pdf
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File Function: First version, 2006
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Publisher Info
Paper provided by Department of Economics, Vanderbilt University in its series Working Papers with number 0622.

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Date of creation: Nov 2006
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Handle: RePEc:van:wpaper:0622

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Related research
Keywords: Seigniorage; liquidity; rate of return dominance; optimal monetary policy;

Find related papers by JEL classification:
E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
F00 - International Economics - - General - - - General
G00 - Financial Economics - - General - - - General
H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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Cited by:
(explanations, 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.)

  1. Diego Escobari & Li Gan, 2007. "Price Dispersion under Costly Capacity and Demand Uncertainty," NBER Working Papers 13075, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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