Currency competition in a fundamental model of money

• 成果类型: Article
• 署名作者: Camera, G; Craig, B; Waller, CJ
• 署名单位: Purdue University System; Purdue University; Federal Reserve System - USA; Federal Reserve Bank - Cleveland; University of Notre Dame
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2003.09.002
• 发表日期: 2004
• 页码: 521-544
• 关键词: money; Currency competition; search; dollarization

摘要

We study how two fiat monies, one safe and one risky, compete in a decentralized trading environment. The currencies' equilibrium values, their transaction velocities and agents' spending patterns are endogenously determined. We derive conditions under which agents holding diversified currency portfolios spend the safe currency first and hold the risky one for later purchases. We also examine when the reverse spending pattern is optimal. Traders generally favor dealing in the safe currency, unless trade frictions and the currency risk is low. As risk increases or trading becomes more difficult, the transaction velocity and value of the safe money increases. (C) 2003 Elsevier B.V All rights reserved.