Inside-Outside Money Competition

Ramon Marimon, Juan Pablo Nicolini () and Pedro Teles ()

No 4039, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study how competition from privately-supplied currency substitutes affects monetary equilibria. Whenever currency is inefficiently provided, inside money competition plays a disciplinary role by providing an upper bound on equilibrium inflation rates. Furthermore, if ‘inside monies’ can be produced at a sufficiently low cost, outside money is driven out of circulation. Whenever a ’benevolent’ government can commit to its fiscal policy, sequential monetary policy is efficient and inside money competition plays no role.

Keywords: currency competition; electronic money; inflation; inside money; reputation (search for similar items in EconPapers)
JEL-codes: E40 E50 E58 E60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-ifn, nep-mac and nep-mon
Date: 2003-09
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Related works:
Working Paper: Inside-outside money competition (2003)
Working Paper: Inside Outside Money Competition (2001)
Journal Article: Inside-outside money competition (2003)
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