American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Money Mining and Price Dynamics
American Economic Journal: Macroeconomics
vol. 13,
no. 4, October 2021
(pp. 246–94)
Abstract
We develop a random-matching model to study the price dynamics of monies produced privately according to a time-consuming mining technology. For our leading example, there exists a unique equilibrium where the value of money increases over time and reaches a steady state. There is also a continuum of perfect-foresight equilibria where the price of money inflates and bursts gradually over time. Initially, money is held for a speculative motive, but it acquires a transactional role as it becomes sufficiently abundant. We study fiat, commodity, and crypto monies, endogenous acceptability, and adopt implementation and equilibrium approaches.Citation
Choi, Michael, and Guillaume Rocheteau. 2021. "Money Mining and Price Dynamics." American Economic Journal: Macroeconomics 13 (4): 246–94. DOI: 10.1257/mac.20200034Additional Materials
JEL Classification
- E31 Price Level; Inflation; Deflation
- E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
- E51 Money Supply; Credit; Money Multipliers
- N13 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Europe: Pre-1913
- N14 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Europe: 1913-
- N23 Economic History: Financial Markets and Institutions: Europe: Pre-1913
- N24 Economic History: Financial Markets and Institutions: Europe: 1913-