Monetary policy with asset-backed money
We study the use of intermediated assets as media of exchange in a neo- classical growth model. An intermediary is delegated control over productive capital and finances itself by issuing claims against the revenue generated by its operations. Unlike physical capital, intermediated claims are assumed to be liquid-they constitute a form of asset-backed money. The intermediary is assumed to control 1) the number of claims outstanding, 2) the dividends paid out to claim holders and 3) the fee charged for collecting the dividend. We find that for patient economies, the first-best allocation can always be implemented as a competitive equilibrium through an appropriately designed intermediary policy rule. The optimal policy requires strictly positive inflation. While it is also possible to implement the first-best by introducing at money and a lump- sum tax instrument, our results demonstrate that neither of these interventions are necessary for efficiency.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.stlouisfed.org/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Andolfatto, David, 2007.
"Essential Interest-Bearing Money,"
4780, University Library of Munich, Germany.
- David Andolfatto, 2008. "Essential Interest-Bearing Money," EIEF Working Papers Series 0802, Einaudi Institute for Economics and Finance (EIEF), revised Oct 2008.
- David Andolfatto, 2009. "Essential interest-bearing money," Working Papers 2009-044, Federal Reserve Bank of St. Louis.
- David Andolfatto, 2007. "Essential Interest-Bearing Money," Discussion Papers dp07-16, Department of Economics, Simon Fraser University.
- Thomas J. Sargent & Neil Wallace, 1983.
"A model of commodity money,"
85, Federal Reserve Bank of Minneapolis.
- Rocheteau, Guillaume, 2011. "Payments and liquidity under adverse selection," Journal of Monetary Economics, Elsevier, vol. 58(3), pages 191-205.
- Guillaume Rocheteau & Randall Wright, 2003.
"Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium,"
PIER Working Paper Archive
03-031, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Guillaume Rocheteau & Randall Wright, 2005. "Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium," Econometrica, Econometric Society, vol. 73(1), pages 175-202, 01.
- Guillaume Rocheteau & Randall Wright, 2004. "Money in search equilibrium, in competitive equilibrium, and in competitive search equilibrium," Working Paper 0405, Federal Reserve Bank of Cleveland.
- Randall Wright & Guillame Rocheteau, 2003. "Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium," Levine's Bibliography 666156000000000302, UCLA Department of Economics.
- S. Boragan Aruoba & Randall Wright, 2003.
"Search, money, and capital: a neoclassical dichotomy,"
Federal Reserve Bank of Cleveland, pages 1085-1117.
- S. Boragan Aruoba & Randall Wright, 2002. "Search, money and capital: a neoclassical dichotomy," Working Paper 0208, Federal Reserve Bank of Cleveland.
- Ricardo Lagos & Guillaume Rocheteau, 2006.
"Money and capital as competing media of exchange,"
0608, Federal Reserve Bank of Cleveland.
- Fama, Eugene F., 1983. "Financial intermediation and price level control," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 7-28.
- Jacquet, Nicolas L. & Tan, Serene, 2012. "Money and asset prices with uninsurable risks," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 784-797.
- Michele Fratianni, 2006. "Government Debt, Reputation and Creditors’ Protections: The Tale of San Giorgio," Review of Finance, European Finance Association, vol. 10(4), pages 487-506, December.
- Milton Friedman & Anna J. Schwartz, 1987.
"Has Government Any Role in Money?,"
in: Money in Historical Perspective, pages 289-314
National Bureau of Economic Research, Inc.
- Klein, Benjamin, 1974. "The Competitive Supply of Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 6(4), pages 423-53, November.
- Levine, David K., 1991.
"Asset trading mechanisms and expansionary policy,"
Journal of Economic Theory,
Elsevier, vol. 54(1), pages 148-164, June.
- Benjamin Lester & Andrew Postlewaite & Randall Wright, 2012. "Information, Liquidity, Asset Prices, and Monetary Policy," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 1209-1238.
- Barro, Robert J, 1979. "Money and the Price Level under the Gold Standard," Economic Journal, Royal Economic Society, vol. 89(353), pages 13-33, March.
- Klein, Benjamin, 1976. "Competing Monies: Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 8(4), pages 513-19, November.
When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:2013-030. 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: (Anna Xiao)
If references are entirely missing, you can add them using this form.