UNIverse - Public Research Portal
Project cover

Monetary Policy with Asset-Backed Money

Research Project
 | 
01.01.2015
 - 31.12.2027

We study the use of asset-backed money in a neoclassical growth model with illiquid capital. A mechanism is delegated control of productive capi- tal and issues claims against the revenue it earns. These claims constitute a form of asset-backed money. The mechanism determines (i) the number of claims outstanding, (ii) the dividends paid to claim holders, and (iii) the structure of redemption fees. We find that for capital-rich economies, the first-best allocation can be implemented and price stability is optimal. However, for sufficiently capital-poor economies, achieving the first-best allocation requires a strictly positive rate of inflation. In general, the minimum infiation necessary to implement the first-best allocation is above the Friedman rule and varies with capital wealth.

Collaborations & Cooperations

2015 - Participation or Organization of Collaborations on an international level
Andolfatto, David, Federal Reserve Bank of St. Louis and Simon Fraser University, Research cooperation
2015 - Participation or Organization of Collaborations on an international level
Waller, Christoph, Federal Reserve Bank of St. Louis and University of Notre Dame, Research cooperation

Publications

Andolfatto, David, Berentsen, Aleksander and Waller, Christopher (2016) ‘Monetary policy with asset-backed money’, Journal of Economic Theory, 164, pp. 166–186. Available at: https://doi.org/10.1016/j.jet.2015.08.006.

URLs
URLs

Members (1)

Profile Photo

Aleksander Berentsen

Principal Investigator