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On the private provision of fiat currency

Berentsen, Aleksander. (2006) On the private provision of fiat currency. European economic review, Vol. 50, H. 7. pp. 1683-1698.

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Official URL: http://edoc.unibas.ch/dok/A5249009

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Abstract

This paper considers whether fiat money can be provided by a revenue-maximizing monopolist in an environment where money is essential. Two questions arise concerning the private supply of money: Is it feasible and is it optimal? Concerning the feasibility question, I show that the revenue-maximizing policy is time-consistent if the trading history of the issuer is public information and if money demanders respond to the revelation of defection by playing autarky. Concerning the optimality question, the model suggests that any private organization of the market for fiat currency is suboptimal. (c) 2005 Elsevier B.V. All rights reserved.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Wirtschaftstheorie (Berentsen)
UniBasel Contributors:Berentsen, Aleksander
Item Type:Article, refereed
Article Subtype:Research Article
Bibsysno:Link to catalogue
Publisher:North Holland Publ.
ISSN:0014-2921
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:22 Nov 2018 15:04
Deposited On:22 Mar 2012 14:03

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