Another example in which lump-sum money creation is beneficial

Alexei Deviatov, Neil Wallace

Research output: Contribution to journalArticlepeer-review

Abstract

A probabilistic version of lump-sum money creation is studied in a random matching model with indivisible money and individual holdings bounded at 2 units. Sufficient conditions are obtained for an ex ante optimum from among implementable steady states to involve lump-sum creation of money. The role of that creation is to change the distribution of money holdings to permit more trade to occur. Beneficial money creation is impossible in a version with a 1 unit upper bound on individual holdings, but can almost certainly happen for all higher bounds.

Original languageEnglish (US)
Article number1
JournalB.E. Journal of Macroeconomics
Volume1
Issue number1
DOIs
StatePublished - Jun 1 2001

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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