Showing papers by "Neil Wallace published in 2010"
TL;DR: In this article, the authors consider settings with three frictions: imperfect monitoring, costly connections among people, and imperfect recognizability of assets, and an illustrative model with those frictions is used to explain 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.
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.
66 citations
TL;DR: In this article, the authors consider a model with extreme versions of an above-ground economy and a benign underground economy and show that it is not optimal to use taxes to raise the return on money held by anonymous people.
Abstract: Monetary policy and the welfare cost of in‡ation cannot be studied without some speci…cation of allowable …scal instruments. Here, feasible policies are implied by the frictions imposed to get roles for money and credit. The model has extreme versions of an above-ground economy— people who are perfectly monitored and who, therefore, can be taxed— and a benign underground economy— people who are anonymous and, who, therefore, cannot be taxed. For examples, ex ante (representativeagent) optima are computed. For most examples for the outside-money version, it is not optimal to use taxes to raise the return on money held by anonymous people. {101 words}
4 citations
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TL;DR: In this paper, the authors consider a model with extreme versions of an above-ground economy and a benign underground economy and show that it is not optimal to use taxes to raise the return on money held by anonymous people.
Abstract: Monetary policy and the welfare cost of inflation cannot be studied without some specification of allowable fiscal instruments. Here, feasible policies are implied by the frictions imposed to get roles for money and credit. The model has extreme versions of an above-ground economy and a benign underground economy. The former consists of people who are perfectly monitored and who, therefore, can be taxed; while the latter consists of people who are anonymous and, who, therefore, cannot be taxed. For various examples, ex ante (representative-agent) optima are computed. For most examples for the outside-money version of the model, it is not optimal to use taxes to raise the return on money held by anonymous people.
1 citations