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International Seigniorage Payments

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  • Benjamin Eden

    ()
    (Department of Economics, Vanderbilt University)

Abstract

What are the "liquidity services" provided by �over-priced� assets? How do international seigniorage payments affect the choice of monetary policies? Does a country gain when other hold its �over-priced� 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.accessecon.com/pubs/VUECON/vu06-w22.pdf
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics 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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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

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

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Cited by:
  1. Eden, Benjamin, 2007. "Inefficient trade patterns: Excessive trade, cross-hauling and dumping," Journal of International Economics, Elsevier, vol. 73(1), pages 175-188, September.
  2. Diego Escobari & Li Gan, 2007. "Price Dispersion under Costly Capacity and Demand Uncertainty," NBER Working Papers 13075, National Bureau of Economic Research, Inc.

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