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: |
Fax: (82-2) 928-4948
Web page: http://econ.korea.ac.kr/~ri
More information through EDIRC
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.:
- Thomas J. Sargent & Francois R. Velde, 1997.
"The big problem of small change,"
Working Paper Series, Macroeconomic Issues
WP-97-08, Federal Reserve Bank of Chicago.
- 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.
- 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.
- Jovanovic, B. & Ueda, M., 1996.
"Contracts and Money,"
96-23, C.V. Starr Center for Applied Economics, New York University.
- Aliprantis, C.D. & Camera, Gabriele & Puzzello, D., 2005.
"Anonymous Markets and Monetary Trading,"
Purdue University Economics Working Papers
1179, Purdue University, Department of Economics.
- François Velde, 2006.
"Chronicles of a deflation unforetold,"
Working Paper Series
WP-06-12, Federal Reserve Bank of Chicago.
- repec:cup:cbooks:9780521570916 is not listed on IDEAS
- 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.
- 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.
- 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.
- 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.
- 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.
- Arthur J. Rolnick & Francois R. Velde & Warren E. Weber, 1997. "The debasement puzzle: an essay on medieval monetary history," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 8-20.
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.