Inside-Outside Money Competition

Ramon Marimon, Pedro Teles and Juan Pablo Nicolini

No 4039, CEPR Discussion Papers from Centre for Economic Policy Research

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: Electronic money; Inside money; Currency competition; Reputation; inflation (search for similar items in EconPapers)
JEL-codes: E40 E50 E58 E60 (search for similar items in EconPapers)
Date: 2003-09
New Economics Papers: this item is included in nep-dge, nep-ifn, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Journal Article: Inside-outside money competition (2003)
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Working Paper: Inside Outside Money Competition (2001)
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