In an economy with commodity-pairwise trading posts and transaction costs, commodity money is endogenously determined in general equilibrium. Absent double coincidence of wants, the lowtransaction cost commodity (with the narrowest proportional bid/ask price spread) becomes the common medium of exchange. JEL Classification: C62, E40

This paper uses a direct-projections approach to estimate the effect of capital gains taxation on realizations at state level and then develops framework for determining revenue-maximizing rates federal level. We find that elasticity revenues with respect tax rate over 10-year period is −0.5 −0.3, indicating cuts do not pay themselves 5 percentage point increase would yield $18 $30 billion in a...

We show that the fiscal authorities of high-tax countries can lack incentives to combat profit shifting tax havens. Instead, they have focus their enforcement efforts on relocating profits booked by multinationals in other countries, crowding out transactions shift havens, and reducing global payments multinational companies. The predictions our model are motivated supported analysis two new da...

We study fiscal rules using a sovereign default model. A debt-brake (spread-brake) rule imposes ceiling on the deficit when debt (spread) is above threshold. For our benchmark calibration, similar gains can be achieved with optimal or spread brake. However, for “Union” of heterogeneous economies, common brake generates larger than Furthermore, from abandoning may significant economies that are ...

Faced with real and nominal shocks, what should a benevolent central bank do, fix the money growth rate or target the inflation rate? In this paper, we make a first attempt at studying the optimal choice of monetary policy instruments in a micro-founded model of money. Specifically, we produce an overlapping generations economy in which limited communication and stochastic relocation creates an...

Prior to the …nancial crisis mainstream monetary policy practice had become disconnected from money. We outline the basic rationale for this development using a simple model of money and credit in which we explore the conditions under which money matters directly for the conduct of policy. Then, drawing on Goodfriend and McCallum’s (2007) DSGE model, we examine the circumstances under which mon...

PurposeWe respond to some challenges in the transition to Sustainable Development Goals by examining the correlations between mobile and inclusive development (quality of growth, poverty and inequality) in 93 developing countries for the year 2011. Design/methodology/approachMobile money service entails: ‘mobile used to pay bills’ and ‘mobile used to receive/send money’. Interactive Ordinary Le...

a r t i c l e i n f o a b s t r a c t JEL classification: C73 D8 E4 E5 Keywords: Fiat money Random matching Dynamic games Memory Monitoring I use a simplified version of Trejos and Wright's (1995) random matching environment to make a point about when fiat money is essential – that is, when the set of equilibrium outcomes is strictly larger with money than without. Under two natural forms of li...

In this paper, an empirically stable money demand model for M3 in the euro area is constructed. Starting with a multivariate system, three cointegrating relationships with economic content are found: (i) the spread between the longand the short-term nominal interest rates, (ii) the long-term real interest rate, and (iii) a long-run demand for broad money M3. There is evidence that the determina...

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. The recent recovery in Latin America has been impressive but ...