Money is an experience good: competition and trust in the private provision of money

Ramon Marimon, Juan Pablo Nicolini and Pedro Teles

No 467, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: The interplay between competition and trust as efficiency-enhancing mechanisms in the private provision of money is studied. 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 be achieved. The quality of money can be observed only after its purchasing capacity is realized. In this sense, money is an experience good.

Keywords: Inflation; (Finance) (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-dge, nep-mac, nep-mon and nep-soc
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Citations: View citations in EconPapers (19)

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http://www.minneapolisfed.org/research/sr/sr467.pdf

Related works:
Journal Article: Money is an experience good: Competition and trust in the private provision of money (2012)
Working Paper: Money is an Experience Good: Competition and Trust in the Private Provision of Money (2011)
Working Paper: Money is an experience good: competition and trust in the private provision of money (2011)
Working Paper: Money is an Experience Good: Competition and Trust in the Private Provision of Money (2009)
Working Paper: Money is an Experience Good: Competition and Trust in the Private Provision of Money (2009)
Working Paper: Money is an Experience Good: Competition and Trust in the Private Provision of Money
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