TY - JOUR
T1 - Inside-outside money competition
AU - Marimon, Ramon
AU - Nicolini, Juan Pablo
AU - Teles, Pedro
PY - 2003/11
Y1 - 2003/11
N2 - We study how competition from privately supplied currency substitutes affects monetary equilibria. Whenever currency is inefficiently provided, inside money competition plays a disciplinary role by providing an upper bound on equilibrium inflation rates. Furthermore, if "inside monies" can be produced at a sufficiently low cost, outside money is driven out of circulation. Whenever a 'benevolent' government can commit to its fiscal policy, sequential monetary policy is efficient and inside money competition plays no role.
AB - We study how competition from privately supplied currency substitutes affects monetary equilibria. Whenever currency is inefficiently provided, inside money competition plays a disciplinary role by providing an upper bound on equilibrium inflation rates. Furthermore, if "inside monies" can be produced at a sufficiently low cost, outside money is driven out of circulation. Whenever a 'benevolent' government can commit to its fiscal policy, sequential monetary policy is efficient and inside money competition plays no role.
KW - Currency competition
KW - Electronic money
KW - Inflation
KW - Inside money
KW - Reputation
UR - http://www.scopus.com/inward/record.url?scp=0344873678&partnerID=8YFLogxK
U2 - 10.1016/j.jmoneco.2003.08.009
DO - 10.1016/j.jmoneco.2003.08.009
M3 - Article
AN - SCOPUS:0344873678
SN - 0304-3932
VL - 50
SP - 1701
EP - 1718
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
IS - 8
ER -