Working Paper 07 - 16 November 2007 Counterfeiting as Private Money in Mechanism Design
نویسندگان
چکیده
Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded offi cial Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. We describe counterfeiting activity as the issuance of private money, one which is diffi cult to monitor. Our approach, which amends the basic random-matching model of money in mechanism design, allows a tractable welfare analysis of currency competition. We show that it is not effi cient to eliminate counterfeiting activity completely. We do not appeal to lottery devices, and we argue that this is consistent with imperfect monitoring.
منابع مشابه
Working Paper No. 10-29 Comment on Cavalcanti and Nosal’s “counterfeiting as Private Money in Mechanism Design”
In this comment, I extend Cavalcanti and Nosals (2010) framework to include the case of perfectly divisible money and unrestricted money holdings. I show that when trade takes place in Walrasian markets, counterfeits circulate and the Friedman rule is still optimal.
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