Is uniform money always better than separate monies?

Research output: Contribution to journalArticle

Abstract

Previous studies that compare a uniform money with separate monies used models in which money is the only asset and in which individuals hold either zero or one unit of money. Here, the comparison is made using a model in which money coexists with a higher-return asset and in which individuals are permitted to hold richer portfolios of assets. The results show that a general conclusion is not possible. A uniform money has a higher expected utility than do separate monies in many examples. However, when the discount on bonds and uncertainty about the nationality of the trading partner are sufficiently high, then there are examples in which separate monies are better.

Original languageEnglish
Pages (from-to)21-42
Number of pages22
JournalOpen Economies Review
Volume19
Issue number1
DOIs
Publication statusPublished - 2008 Feb

Keywords

  • Random matching model
  • Separate monies
  • Uniform money

ASJC Scopus subject areas

  • Economics and Econometrics

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