We employ a monetary model with endogenous search and random consumption preferences to consider the extent to which a government can ban an alternative currency, like bitcoin. We define a ban as a policy whereby government agents refuse to accept an alternative currency and mete out punishments to private agents caught using it. After identifying monetary equilibria where an alternative currency is accepted, we then derive the conditions under which a ban might deter its use. As in earlier studies, we show that a government of sufficient size can prevent an alternative currency from circulating without relying on punishments. We also show that, given its size, a government can ban an alternative currency so long as it is willing and able to mete out sufficiently severe punishments.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 141 (2017)
Issue (Month): C ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/jebo|
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.:
- Aiyagari, S. Rao & Wallace, Neil, 1997.
"Government Transaction Policy, the Medium of Exchange, and Welfare,"
Journal of Economic Theory,
Elsevier, vol. 74(1), pages 1-18, May.
- S. Rao Aiyagari & Neil Wallace, 1995. "Government transaction policy, the medium of exchange, and welfare," Working Papers 516, Federal Reserve Bank of Minneapolis.
- repec:eme:aaeczz:s1529-213420140000018008 is not listed on IDEAS
- Lotz, Sebastien & Rocheteau, Guillaume, 2002. "On the Launching of a New Currency," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(3), pages 563-588, August.
- François Velde, 2013. "Bitcoin: a primer," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Dec.
- Selgin, George A, 1994. "On Ensuring the Acceptability of a New Fiat Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 808-826, November.
- Selgin, G., 1993. "On Ensuring the Acceptability of a New Fiat Money," Papers 368, Georgia - College of Business Administration, Department of Economics.
- Joshua R. Hendrickson & Thomas L. Hogan & William J. Luther, 2016. "The Political Economy Of Bitcoin," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 925-939, 04.
- David Yermack, 2013. "Is Bitcoin a Real Currency? An economic appraisal," NBER Working Papers 19747, National Bureau of Economic Research, Inc.
- William J. Luther, 2016. "Cryptocurrencies, Network Effects, And Switching Costs," Contemporary Economic Policy, Western Economic Association International, vol. 34(3), pages 553-571, 07.
- Aaron Yelowitz & Matthew Wilson, 2015. "Characteristics of Bitcoin users: an analysis of Google search data," Applied Economics Letters, Taylor & Francis Journals, vol. 22(13), pages 1030-1036, September.
- Wilson, Matthew & Yelowitz, Aaron, 2014. "Characteristics of Bitcoin Users: An Analysis of Google Search Data," MPRA Paper 59661, University Library of Munich, Germany.
- Jesús Fernández-Villaverde & Daniel Sanches, 2016. "Can Currency Competition Work?," NBER Working Papers 22157, National Bureau of Economic Research, Inc.
- Fernández-Villaverde, Jesús & Sanches, Daniel, 2016. "Can Currency Competition Work?," CEPR Discussion Papers 11095, C.E.P.R. Discussion Papers.
- Fernandez-Villaverde, Jesus & Sanches, Daniel R., 2016. "Can currency competition work?," Working Papers 16-12, Federal Reserve Bank of Philadelphia.
- William J. Luther, 2013. "Friedman Versus Hayek on Private Outside Monies: New Evidence for the Debate," Economic Affairs, Wiley Blackwell, vol. 33(1), pages 127-135, 02.
- Christopher J. Waller & Elisabeth S. Curtis, 2003. "Currency restrictions, government transaction policies and currency exchange," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 19-42, 01.
- Li, Yiting & Wright, Randall, 1998. "Government Transaction Policy, Media of Exchange, and Prices," Journal of Economic Theory, Elsevier, vol. 81(2), pages 290-313, August.
- Dean Corbae & Ted Temzelides & Randall Wright, 2002. "Matching and Money," American Economic Review, American Economic Association, vol. 92(2), pages 67-71, May.
- Rainer Böhme & Nicolas Christin & Benjamin Edelman & Tyler Moore, 2015. "Bitcoin: Economics, Technology, and Governance," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 213-238, Spring.
- Dwyer, Gerald P., 2015. "The economics of Bitcoin and similar private digital currencies," Journal of Financial Stability, Elsevier, vol. 17(C), pages 81-91.
- Dean Corbae & Ted Temzelides & Randall Wright, 2003. "Directed Matching and Monetary Exchange," Econometrica, Econometric Society, vol. 71(3), pages 731-756, 05.
- George Selgin, 2003. "Adaptive Learning and the Transition to Fiat Money," Economic Journal, Royal Economic Society, vol. 113(484), pages 147-165, January.
- Goldberg, Dror, 2007. "Money with partially directed search," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 979-993, May. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:141:y:2017:i:c:p:188-195. 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: (Dana Niculescu)
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.