Nominal Exchange Rate Determinacy under the Threat of Currency Counterfeiting
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Gomis-Porqueras, Pedro; Kam, Timothy; Waller, Christopher
Description
We study the endogenous choice to accept fiat objects as media of exchange and their implications for nominal exchange rate determination. We consider a two-country environment with two currencies that can be used to settle any transactions. However, currencies can be counterfeited at a fixed cost and the decision to counterfeit is private information. This induces equilibrium liquidity constraints on the currencies in circulation. We show that the threat of counterfeiting can pin down the...[Show more]
dc.contributor.author | Gomis-Porqueras, Pedro | |
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dc.contributor.author | Kam, Timothy | |
dc.contributor.author | Waller, Christopher | |
dc.date.accessioned | 2021-08-19T01:41:51Z | |
dc.date.available | 2021-08-19T01:41:51Z | |
dc.identifier.issn | 1945-7707 | |
dc.identifier.uri | http://hdl.handle.net/1885/244036 | |
dc.description.abstract | We study the endogenous choice to accept fiat objects as media of exchange and their implications for nominal exchange rate determination. We consider a two-country environment with two currencies that can be used to settle any transactions. However, currencies can be counterfeited at a fixed cost and the decision to counterfeit is private information. This induces equilibrium liquidity constraints on the currencies in circulation. We show that the threat of counterfeiting can pin down the nominal exchange rate even when the currencies are perfect substitutes, thus breaking the famous Kareken-Wallace indeterminacy result. | |
dc.format.mimetype | application/pdf | |
dc.language.iso | en_AU | |
dc.publisher | American Economic Association | |
dc.rights | © 2017 American Economic Association | |
dc.source | American Economic Journal: Macroeconomics | |
dc.title | Nominal Exchange Rate Determinacy under the Threat of Currency Counterfeiting | |
dc.type | Journal article | |
local.description.notes | Imported from ARIES | |
local.identifier.citationvolume | 9 | |
dc.date.issued | 2017 | |
local.identifier.absfor | 140200 - APPLIED ECONOMICS | |
local.identifier.ariespublication | a383154xPUB5716 | |
local.publisher.url | http://www.aeaweb.org/aej/mac/index.php | |
local.type.status | Published Version | |
local.contributor.affiliation | Gomis-Porqueras, Pedro, Deakin University | |
local.contributor.affiliation | Kam, Timothy, College of Business and Economics, ANU | |
local.contributor.affiliation | Waller, Christopher, Research Division, Federal Reserve Bank of St. Louis | |
local.bibliographicCitation.issue | 2 | |
local.bibliographicCitation.startpage | 256 | |
local.bibliographicCitation.lastpage | 273 | |
local.identifier.doi | 10.1257/mac.20150172 | |
dc.date.updated | 2020-11-23T10:53:06Z | |
local.identifier.scopusID | 2-s2.0-85017152080 | |
local.identifier.thomsonID | 000398734900008 | |
dcterms.accessRights | Open Access | |
dc.provenance | https://v2.sherpa.ac.uk/id/publication/9858..."The Published Version can be archived in a Non-Commercial Institutional Repository" from SHERPA/RoMEO site (as at 19/08/2021). | |
Collections | ANU Research Publications |
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File | Description | Size | Format | Image |
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01_Gomis-Porqueras_Nominal_Exchange_Rate_2017.pdf | 538.23 kB | Adobe PDF |
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