The mechanism-design approach to monetary theory

Research output: Contribution to journalArticle

30 Scopus citations

Abstract

The mechanism-design approach to monetary theory is the search for fruitful settings in which money is necessary for the achievement of some desirable allocations. Fruitfulness means that the settings provide insights about puzzling observations and policy questions. Settings with three frictions are considered: imperfect monitoring, costly connections among people, and imperfect recognizability of assets. An illustrative model with those frictions is used to explain as an optimum the following features of actual economies: currency is a uniform object, currency is (usually) dominated in rate of return, some transactions are accomplished using currency and others are accomplished in other ways.

Original languageEnglish (US)
Pages (from-to)3-23
Number of pages21
JournalHandbook of Monetary Economics
Volume3
Issue numberC
DOIs
StatePublished - Dec 22 2010

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)

Fingerprint Dive into the research topics of 'The mechanism-design approach to monetary theory'. Together they form a unique fingerprint.

  • Cite this