IDEAS home Printed from https://ideas.repec.org/p/red/sed006/462.html
   My bibliography  Save this paper

Counterfeit $$$

Author

Listed:
  • Elena Quercioli
  • Lones Smith

    () (Dept of Economics University of Michigan)

Abstract

This paper offers a novel positive theory of counterfeit money, in which the counterfeiters compete against both law enforcement and innocent individuals forced to verify their currency. Law enforcement efforts against counterfeiting can crowd out verification, and thus have perverse consequences, ignoring the market response. Verifiers play a supermodular "hot potato" game passing the potentially counterfeit currency, and each hurts the other by his verifying activity. Our theory simultaneously explains three key stylized facts of counterfeiting: For one, the seized to passed ratio increases in the denomination. Second, the vast majority of counterfeit money used to be seized before circulation, while now the reverse holds. Third, the $10, $20, and $100 denomination notes are counterfeited most often, and $5 and $50 the least

Suggested Citation

  • Elena Quercioli & Lones Smith, 2006. "Counterfeit $$$," 2006 Meeting Papers 462, Society for Economic Dynamics.
  • Handle: RePEc:red:sed006:462
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    counterfeit money; supermodular game; matching; passed; seized;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed006:462. 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: (Christian Zimmermann). General contact details of provider: http://edirc.repec.org/data/sedddea.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.