A model of (the threat of) counterfeiting

Ed Nosal and Neil Wallace ()

No 401, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: A simple matching-model of money with the potential for counterfeiting is constructed. In contrast to the existing literature, counterfeiting, if it occurred, would be accompanied by two distortions: costly production of counterfeits and harmful effects on trade. However, application of the Cho-Kreps refinement is shown to imply that there is no equilibrium with counterfeiting. If the cost of producing counterfeits is low enough, then there is no monetary equilibrium. Otherwise, there is a monetary equilibrium without counterfeiting.

Keywords: Counterfeits; and; counterfeiting (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge and nep-mon
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Citations: View citations in EconPapers (3)

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Journal Article: A model of (the threat of) counterfeiting (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:0401

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DOI: 10.26509/frbc-wp-200401

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