Unit of Account, Medium of Exchange, and Prices
The separation of a unit of account (UoA) from a medium of exchange (MoE) in the commodity-money system is investigated by considering explicitly a sellerÂ¡Â¯s choice with regard to posting price in terms of either an MoE or a UoA. If the likelihood of debasement of MoE or its rate is high enough and agents are sufficiently risk averse, there exists a monetary equilibrium in which price is quoted in terms of a UoA. Further, a UoA-posting equilibrium yields the flexible nominal price, whereas an MoE-posting equilibrium yields the sticky one. This suggests that in the fiat-money system where MoE and UoA are integrated, price would not be flexibly adjusted.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: 1-5-Ga, Anam-dong, Sung buk-ku, Seoul, 136-701|
Fax: (82-2) 928-4948
Web page: http://econ.korea.ac.kr/~ri
More information through EDIRC
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.:
- Glassman, Debra & Redish, Angela, 1988. "Currency depreciation in early modern England and France," Explorations in Economic History, Elsevier, vol. 25(1), pages 75-97, January.
- Arthur J. Rolnick & Francois R. Velde & Warren E. Weber, 1997.
"The debasement puzzle: an essay on medieval monetary history,"
Federal Reserve Bank of Minneapolis, issue Fall, pages 8-20.
- Rolnick, Arthur J. & Velde, François R. & Weber, Warren E., 1996. "The Debasement Puzzle: An Essay on Medieval Monetary History," The Journal of Economic History, Cambridge University Press, vol. 56(04), pages 789-808, December.
- D. Aliprantis, C. & Camera, G. & Puzzello, D., 2007.
"Anonymous markets and monetary trading,"
Journal of Monetary Economics,
Elsevier, vol. 54(7), pages 1905-1928, October.
- Jovanovic, B. & Ueda, M., 1996.
"Contracts and Money,"
96-23, C.V. Starr Center for Applied Economics, New York University.
- Narayana R. Kocherlakota, 1996.
"Money is memory,"
218, Federal Reserve Bank of Minneapolis.
- White, Lawrence H, 1984. "Competitive Payments Systems and the Unit of Account," American Economic Review, American Economic Association, vol. 74(4), pages 699-712, September.
- François Velde, 2006.
"Chronicles of a deflation unforetold,"
Working Paper Series
WP-06-12, Federal Reserve Bank of Chicago.
- Irving Fisher, 1913. "A Compensated Dollar," The Quarterly Journal of Economics, Oxford University Press, vol. 27(2), pages 213-235.
- Camera, Gabriele & Winkler, Johannes, 2003. "International monetary trade and the law of one price," Journal of Monetary Economics, Elsevier, vol. 50(7), pages 1531-1553, October.
- Sargent, Thomas J & Velde, Francois R, 1999.
"The Big Problem of Small Change,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 31(2), pages 137-61, May.
- Arthur J. Rolnick & François R. Velde & Warren E. Weber, 1995. "The debasement puzzle: an essay on medieval monetary policy," Working Papers 536, Federal Reserve Bank of Minneapolis.
- Fernando Lefort & Klaus Schmidt-Hebbel, 2002. "Indexation, Inflation and Monetary Policy: An Overview," Central Banking, Analysis, and Economic Policies Book Series, in: Fernando Lefort & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Serie (ed.), Indexation, Inflation and MOnetary Policy, edition 1, volume 2, chapter 1, pages 001-018 Central Bank of Chile.
- Russell W. Cooper & Hubert Kempf, 2001. "Dollarization and the conquest of hyperinflation in divided societies," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 3-12.
When requesting a correction, please mention this item's handle: RePEc:iek:wpaper:1104. 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: (Kim, Jisoo)
If references are entirely missing, you can add them using this form.