2021
DOI: 10.1257/mac.20200034
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Money Mining and Price Dynamics

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 abu… Show more

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Cited by 13 publications
(6 citation statements)
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“…Lastly, we contribute to the growing literature on cryptoeconomics that analyzes the price and exchange rate implications of crypto mining (Choi and Rocheteau, 2020;Garratt and van Oordt, 2019;Huberman et al, 2017;Prat and Walter, 2018), the micro and macroeconomics of blockchain (Amoussou-Guenou et al, 2019;Biais et al, 2019a,b;Ebrahimi et al, 2019;Leshno and Strack, 2020;Saleh, 2020) and token issuance (Cong et al, 2020;Li and Mann, 2020;Prat et al, 2019), and the macroeconomic implications of cryptocurrencies via currency competition (Benigno, 2019;Benigno et al, 2019;Fernández-Villaverde and Sanches, 2019;Schilling and Uhlig, 2019). Our paper abstracts from the existence of competing digital currencies and assumes full functionality of the CBDC account and ledger system.…”
Section: Related Literaturementioning
confidence: 95%
“…Lastly, we contribute to the growing literature on cryptoeconomics that analyzes the price and exchange rate implications of crypto mining (Choi and Rocheteau, 2020;Garratt and van Oordt, 2019;Huberman et al, 2017;Prat and Walter, 2018), the micro and macroeconomics of blockchain (Amoussou-Guenou et al, 2019;Biais et al, 2019a,b;Ebrahimi et al, 2019;Leshno and Strack, 2020;Saleh, 2020) and token issuance (Cong et al, 2020;Li and Mann, 2020;Prat et al, 2019), and the macroeconomic implications of cryptocurrencies via currency competition (Benigno, 2019;Benigno et al, 2019;Fernández-Villaverde and Sanches, 2019;Schilling and Uhlig, 2019). Our paper abstracts from the existence of competing digital currencies and assumes full functionality of the CBDC account and ledger system.…”
Section: Related Literaturementioning
confidence: 95%
“…Lastly, we contribute to the growing literature on cryptoeconomics that analyzes the price and exchange rate implications of crypto mining (Choi and Rocheteau, 2020;Garratt and van Oordt, 2019;Huberman et al, 2017;Prat and Walter, 2018), the micro and macroeconomics of blockchain (Amoussou-Guenou et al, 2019;Biais et al, 2019a,b;Ebrahimi et al, 2019;Leshno and Strack, 2020;Saleh, 2020) and token issuance (Cong et al, 2020;Li and Mann, 2020;Prat et al, 2019), and the macroeconomic implications of cryptocurrencies via currency competition (Benigno, 2019;Benigno et al, 2019;Fernández-Villaverde and Sanches, 2019;Schilling and Uhlig, 2019). Our paper abstracts from the existence of competing digital currencies and assumes full functionality of the CBDC account and ledger system.…”
Section: Related Literaturementioning
confidence: 95%
“…Chiu and Wong (2015) and Carli and Uras (2023) examine how E‐money improves the efficiency of the economy. Chiu and Koeppl (2022b) and Kang (2023) investigate double spending incentives in the Bitcoin system, and Choi and Rocheteau (2021) and Pagnotta (2022) study cryptocurrency pricing. Fernández‐Villaverde and Sanches (2019), Schilling and Uhlig (2019), and Kang and Lee (forthcoming) explore the macroeconomic implications of cryptocurrencies via currency competition.…”
Section: Introductionmentioning
confidence: 99%