Legal restrictions and international currencies: An experimental approach

• 成果类型: Article
• 署名作者: Ding, Shuze; Puzzello, Daniela
• 署名单位: Nankai University; Indiana University System; Indiana University Bloomington
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2020.103342
• 发表日期: 2020
• 关键词: Search models of money; international economics; Monetary experiment

摘要

This paper integrates theory and experiments to explore how policy rules related to government interventions can affect economic allocations and the international status of a currency. Using a two-country, two-currency search model, we study two types of government interventions: (1) legal restrictions impacting a seller's ability to accept a foreign currency, and (2) reductions to the cost a seller must pay to accept a foreign currency. The first intervention can be viewed as a way to capture a decrease in capital controls, while the second can be viewed as a way to explore the impact of reducing information costs associated with using a foreign currency. Our results indicate that abolishing legal restrictions that impact a seller's ability to accept a foreign currency can increase both quantities traded and the number of trades involving two types of currencies. Additionally, the international status of currencies is significantly enhanced when sellers face very low foreign currency acceptance costs. (C) 2020 Elsevier B.V. All rights reserved.