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Time Consistence And Stable Digital Currency In General Equilibrium

Author

Listed:
  • Rodrigo J. Raad

    (Cedeplar/UFMG)

  • Juan Pablo Gama

    (Cedeplar/UFMG)

Abstract

This paper develops a general equilibrium framework that extends the Ramsey-Friedman taxation model by explicitly incorporating heterogeneous agents, competitive markets, and a central planner responsible for fiscal policy and debt management. Within this unified structure, the model captures the interaction between decentralized market outcomes and centralized policy instruments, while the adoption of quasi-linear preferences guarantees that the planner’s allocations remain time-consistent. Building on these foundations, we introduce a virtual monetary unit that emerges endogenously in equilibrium as a transaction-clearing service. This contribution addresses the open question of how to characterize money within general equilibrium theory, advancing the discussion by proposing a digital system that preserves purchasing power across regions and productive sectors in a stable, non-inflationary manner, without generating distortions in resource allocation.

Suggested Citation

  • Rodrigo J. Raad & Juan Pablo Gama, 2025. "Time Consistence And Stable Digital Currency In General Equilibrium," Textos para Discussão Cedeplar-UFMG 688, Cedeplar, Universidade Federal de Minas Gerais.
    • Handle: RePEc:cdp:texdis:td688
    as

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    File URL: https://www.cedeplar.ufmg.br/pesquisas/td/TD%20688.pdf
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System

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