Money mining and price dynamics: The case of divisible currencies

Michael Choi and Guillaume Rocheteau

Journal of Economic Dynamics and Control, 2022, vol. 142, issue C

Abstract: We develop a random-matching model to study the price dynamics of divisible monies produced privately through mining. The equilibrium set is composed of a unique equilibrium where the value of money increases until it reaches a steady state and, if money has no intrinsic value, a continuum of perfect-foresight equilibria where the price of money inflates and bursts over time. Early on private money is held for a speculative motive and it acquires a transactional role when money supply becomes sufficiently abundant. We study different mining and matching technologies, fiat and commodity monies, single and competing currencies.

Keywords: Money; Search; Private and competing monies; Mining; Divisible (search for similar items in EconPapers)
JEL-codes: E40 E50 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:142:y:2022:i:c:s0165188921000877

DOI: 10.1016/j.jedc.2021.104152

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