We study the interplay between competition and trust as efficiency-enhancing mechanisms in the private provision of money. With commitment, trust is automatically achieved and competition ensures efficiency. Without commitment, competition plays no role. Trust does play a role but requires a bound on efficiency. Stationary inflation must be non-negative and, therefore, the Friedman rule cannot ...

Empirical and experimental evidence documents that money illusion is persistent and widespread. This paper incorporates money illusion into a stochastic continuous-time monetary model of endogenous growth. We model an agent’s money illusion behavior by assuming that he maximizes nonstandard utility derived from both nominal and real quantities. Money illusion affects an agent’s perception of th...

The presence of rational price bubbles during the German hyperinflation is tested under two different structural assumptions on the money process. If the money supply is constrained to be exogenous to the current inflation rate, the hypothesis of no bubble can be rejected. However, this is no longer found to be true when a feedback rule from inflation to money creation is allowed. The analysis ...

This paper is concerned with the saddle-path stability of monetary growth rules in a two-country two-sector dynamic stochastic general equilibrium model. Alongside standard features of emerging economies, such as a combination of producer and local currency pricing for exports, fiscal dominance and oil exports, this model also incorporates informal labour and production sectors and examines how...

• A DSGE model of the Chinese economy with money and shadow banking is developed estimated Indirect Inference. The policy deleveraging restricting reduces private investment lowers aggregate output. In terms stabilization, a nominal GDP targeting superior to Taylor Rule, Friedman rule, or price level rule. This paper develops using framework that accommodates sector money. used shed light on pe...

The ultimate goal of monetary policy is to achieve price stability and high output. In this regard, central banks usually change the interest rate, liquidity, and money base in order to apply monetary policies. The John B. Taylor rule is one of the rules known in the transmission of monetary policy.[1] Based on this rule and given the output gap and inflation gap, the central bank increases or ...

The deferred acceptance algorithm is often used to allocate indivisible objects when monetary transfers are not allowed. We provide two characterizations of agent-proposing deferred acceptance allocation rules. Two new axioms, individually rational monotonicity and weak Maskin monotonicity, are essential to our analysis. An allocation rule is the agent-proposing deferred acceptance rule for som...

This study examines the behavior of money, inflation, and output under fiat and commodity standards to better understand how changes in monetary policy affect economic activity. Using long-term historical data for 15 countries, the study finds that the growth rates of various monetary aggregates are more highly correlated with inflation and with each other under fiat standards than under commod...

A New Keynesian model, estimated using Bayesian methods over a sample period that includes the 2009-15 episode of zero nominal interest rates, illustrates effects replacing Federal Reserve’s historical policy rate management with one targeting money growth instead. Counterfactual simulations show rule for adjusting rate, modestly and gradually, in response to changes output gap delivers perform...