A present value concept for measuring welfare

Gerhard Rösl

No 203, IMFS Working Paper Series from Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)

Abstract: We create an alternative version of the present utility value formula to explicitly show that every store-of-value in the economy bears utility-interest (non-pecuniary income) for its holder regardless of possible interest earnings from financial markets. In addition, we generalize the well-known welfare measures of consumer and producer surplus as present value concepts and apply them not only for the production and usage of consumer goods and durables but also for money and other financial assets. This helps us, inter alia, to formalize the circumstances under which even a producer of legal tender might become insolvent. We also develop a new measure of seigniorage and demonstrate why the well-established concept of monetary seigniorage is flawed. Our framework also allows us to formulate the conditions for liability-issued money such as inside money and financial instruments such as debt certificates to become - somewhat paradoxically - net wealth of the society.

Keywords: Welfare; money; seigniorage; net wealth (search for similar items in EconPapers)
JEL-codes: D14 D60 E41 E50 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ban and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:imfswp:295241

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