Inside-outside money competition

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

No WP-03-09, Working Paper Series from Federal Reserve Bank of Chicago

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: Money; Payment systems (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
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Related works:
Working Paper: Inside Outside Money Competition (2001)
Working Paper: Inside-Outside Money Competition (2003)
Journal Article: Inside-outside money competition (2003)
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