An information-based theory of international currency

• 成果类型: Article
• 署名作者: Zhang, Cathy
• 署名单位: Purdue University System; Purdue University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2014.04.005
• 发表日期: 2014
• 页码: 286-301
• 关键词: International currencies; Monetary search; liquidity; information frictions

摘要

This paper develops an information-based theory of international currency based on search frictions, private trading histories, and imperfect recognizability of assets. Using an open-economy search model with multiple competing currencies, the value of each currency is determined without requiring agents to use a particular currency to purchase a country's goods. Strategic complementarities in portfolio choices and information acquisition decisions generate multiple equilibria with different types of payment arrangements. While some inflation can benefit the country issuing an international currency, the threat of losing international status puts an inflation discipline on the issuing country. When monetary authorities interact in a simple policy game, the temptation to inflate can lead optimal policy to deviate from the Friedman rule. The calibrated model can produce a welfare cost of losing international status for the issuing country larger than previous findings, though estimates depend critically on inflation rates and information costs. (C) 2014 Elsevier B.V. All rights reserved.