On the coexistence of money and higher-return assets and its social role

Guillaume Rocheteau

No 1104, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: This paper adopts mechanism design to tackle the central issue in monetary theory, namely, the coexistence of money and higher-return assets. I describe an economy with pairwise meetings, where fiat money and risk-free capital compete as means of payment. Whenever fiat money has an essential role, any constrained-efficient allocation is such that capital commands a higher rate of return than fiat money.

Keywords: Monetary; theory (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cba, nep-dge, nep-hpe and nep-mon
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Citations: View citations in EconPapers (2)

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Journal Article: On the coexistence of money and higher-return assets and its social role (2013)
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