Money Creation in a Random Matching Model

I study money creation in versions of the Trejos-Wright (1995) and Shi (1995) models with indivisible money and individual holdings bounded at two units. I work with the same class of policies as in Deviatov and Wallace (2001), who study money creation in that model. However, I consider an alternative notion of implementability–the ex ante pairwise core. I compute a set of numerical examples to determine whether money creation is beneficial. I find beneficial e?ects of money creation if individuals are su?ciently risk averse (obtain su?ciently high utility gains from trade) and impatient.inflation; Friedman rule; optimal monetary policy

Exchange-rate volatility, exchange-rate disconnect, and the failure of volatility conservation

Empirical analysis of exchange rates has produced puzzles that conventional models of exchange rates cannot explain. Here we deal with four puzzles regarding both real and nominal exchange rates, which are robust and inconsistent with standard theory. These puzzles are that both real and nominal exchange rates: i) are disconnected from fundamentals, ii) are much more volatile than fundamentals, iii) show little di?erence in behavior, and iv) fail to satisfy conservation of volatility. We develop a two-country, two-currency version of the random matching model to study exchange rates. We show that search and legal restrictions can produce exchange-rate dynamics consistent with these four puzzles.exchange-rate puzzles, exchange-rate volatility, bargaining, search

Estimating a Cagan-type demand function for gold: 1561-1913

Long times series on production of gold and the value of gold, taken from Jastram’s book The Golden Constant, are used to estimate a Cagan-type demand function that relates the real total value of gold to its expected rate of return. The model assumes that gold production and a latent scale variable (income or consumption) are jointly exogenous and that the data are measured with error. The data reject the model: the estimates imply that the real value of gold varies a great deal relative to the expected return and depends negatively, rather than positively, on the expected return.gold, Cagan demand function, estimation

Reputation and the Soft-Budget Constraint

We study the role of reputation in dealing with the soft-budget constraint. We examine whether the reputation of a borrower can lead to repayment in an environment where enforcement is weak. We also introduce lenders’ reputation and examine how this impacts on the allocation of borrowers. We find that reputation can harden budget constraint and improve welfare, although it can never fully eliminate softness. We also show that lenders who acquire a reputation for being tough can earn higher profits than lenders with reputations for being soft.

Equilibration between edge states in the fractional quantum Hall effect regime at high imbalances

We experimentally study equilibration between edge states, co-propagating at the edge of the fractional quantum Hall liquid, at high initial imbalances. We find an anomalous increase of the conductance between the fractional edge states at the filling factor $\nu=2/5$ in comparison with the expected one for the model of independent edge states. We conclude that the model of independent fractional edge states is not suitable to describe the experimental situation at $\nu=2/5$.Comment: 4 page

Separately contacted edge states at high imbalance in the integer and fractional quantum Hall effect regime

This review presents experimental results on the inter-edge-state transport in the quantum Hall effect, mostly obtained in the regime of high imbalance. The application of a special geometry makes it possible to perform I-V spectroscopy between individual edge channels in both the integer and the fractional regime. This makes it possible to study in detail a number of physical effects such as the creation of topological defects in the integer quantum Hall effect and neutral collective modes excitation in fractional regime. The while many of the experimental findings are well explained within established theories of the quantum Hall effects, a number of observations give new insight into the local structure at the sample edge, which can serve as a starting point for further theoretical studies.Comment: 13 pages, 13 figure