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

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.

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Year of publication:	2011
Authors:	Rocheteau, Guillaume
Institutions:	Federal Reserve Bank of Cleveland
Subject:	Monetary theory

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Extent:	application/pdf
Series:	Working Paper.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 1104
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008799670