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International Seigniorage Payments

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  • Benjamin Eden

    (Department of Economics, Vanderbilt University)

Abstract

What are the "liquidity services" provided by �over-priced� assets? How do international seigniorage payments affect the choice of monetary policies? Does a country gain when other hold its �over-priced� assets? These questions are analyzed here in a model in which demand uncertainty (taste shocks) and sequential trade are key. It is shown that a country with a relatively stable demand may issue "over priced" debt and get seigniorage payments from countries with unstable demand. But this does not necessarily improve welfare in the stable demand country.

Suggested Citation

  • Benjamin Eden, 2006. "International Seigniorage Payments," Vanderbilt University Department of Economics Working Papers 0622, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:0622
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    Cited by:

    1. Eden, Benjamin, 2007. "Inefficient trade patterns: Excessive trade, cross-hauling and dumping," Journal of International Economics, Elsevier, vol. 73(1), pages 175-188, September.
    2. Diego Escobari & Li Gan, 2007. "Price Dispersion under Costly Capacity and Demand Uncertainty," NBER Working Papers 13075, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Seigniorage; liquidity; rate of return dominance; optimal monetary policy;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F00 - International Economics - - General - - - General
    • G00 - Financial Economics - - General - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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