Money Mining and Price Dynamics

Michael Choi and Guillaume Rocheteau

American Economic Journal: Macroeconomics, 2021, vol. 13, issue 4, 246-94

Abstract: We develop a random-matching model to study the price dynamics of monies produced privately according to a time-consuming mining technology. For our leading example, there exists a unique equilibrium where the value of money increases over time and reaches a steady state. There is also a continuum of perfect-foresight equilibria where the price of money inflates and bursts gradually over time. Initially, money is held for a speculative motive, but it acquires a transactional role as it becomes sufficiently abundant. We study fiat, commodity, and crypto monies, endogenous acceptability, and adopt implementation and equilibrium approaches.

JEL-codes: E31 E42 E51 N13 N14 N23 N24 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (22)

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Working Paper: Money Mining and Price Dynamics (2021)
Working Paper: Money Mining and Price Dynamics (2019)
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DOI: 10.1257/mac.20200034

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