Topic
Currency
About: Currency is a research topic. Over the lifetime, 26697 publications have been published within this topic receiving 485370 citations. The topic is also known as: monetary unit & unit of money.
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TL;DR: In this paper, an asymmetric information model of sterilized intervention in the foreign exchange market is presented, where a central bank with inside information about its exchange rate target trades with risk averse speculators who have private information about future spot rates.
155 citations
TL;DR: In this article, the authors give necessary and sufficient conditions under which the price process of a particular asset can be chosen as new numeraire, which is related to the characterization of attainable claims that can be hedged.
Abstract: For a price process that has an equivalent risk neutral measure, we investigate if the same property holds when the numeraire is changed. We give necessary and sufficient conditions under which the price process of a particular asset-which should be thought of as a different currency can be chosen as new numeraire, I he result is related to the characterization of attainable claims that can be hedged. Roughly speaking: the asset representing the new currency is a reasonable investment (in terms of the old currency) if and only if the market does not permit arbitrage opportunities in terms of the new currency as numeraire. This rough but economically meaningful idea is given a precise content in this paper. The main ingredients are a duality relation as well as a result on maximal elements. The paper also generalizes results previously obtained by Jacka, Ansel-Strieker and the authors
155 citations
TL;DR: In this article, the authors introduce money in a model of banking in order to examine how open market operations can affect aggregate bank lending and output, and they see two important ways changes in money supply affect the banking system.
Abstract: We introduce money in a model of banking in order to examine how open market operations can affect aggregate bank lending and output. We see two important ways changes in money supply affect the banking system. First, by changing prices and interest rates, it affects the wealth of demanders of real liquidity, and thus the equilibrium production of liquid assets, aggregate output, and the health of the banking system. Second, it changes the value of money as a means of payment, and thus the attractiveness of moving from deposits to currency (the demand for financial liquidity). Again, this impacts the health of the banking system and thus bank lending and aggregate output. We use this understanding to see how changes in money supply can create, alleviate, or be ineffective in banking crises.
154 citations
TL;DR: In this paper, the authors study the effect of currency mismatch on monetary policy in a sticky-price, dynamic general-equilibrium small open economy model in which the country default-risk premium depends on domestic banks' balance sheets due to asymmetric information.
154 citations
TL;DR: In this paper, the authors examined the effect of marginal tax rates on the demand for currency in Norway and Sweden and showed that the uncertainty involved in applying the currency approach to measure the size of the hidden economy is so great as to make it hazardous to rely on such estimates.
Abstract: Variables associated with the level of hidden economic activity are examined in terms of their effects on the demand for currency in Norway and Sweden. Aggregate time series of marginal tax rates are compiled for this purpose. No such effects are evident for Norway, while in the case of Sweden the demand for currency was found to be significantly related to marginal tax rates. These estimates are then used as a basis for deriving an estimate of the size of the hidden economy in Sweden. An analysis of the assumptions underlying this procedure shows that the uncertainty involved in applying the currency approach to measuring the size of the hidden economy is so great as to make it hazardous to rely on such estimates.
153 citations