What do we know about Currency Competition?

Hellwig, Ma in F. A icle Wha do we know abou Cu ency Compe i ion? Zei sch i ü Wi scha s- und Sozialwissenscha en (ZWS) - Vie eljah essch i de Gesellscha ü Wi scha s- und Sozialwissenscha en, Ve ein ü Socialpoli ik P o ided in Coope a ion wi h: Duncke & Humblo , Be lin Sugges ed Ci a ion: Hellwig, Ma in F. (1985) : Wha do we know abou Cu ency Compe i ion?, Zei sch i ü Wi scha s- und Sozialwissenscha en (ZWS) - Vie eljah essch i de Gesellscha ü Wi scha s- und Sozialwissenscha en, Ve ein ü Socialpoli ik, ISSN 0342-1783, Duncke & Humblo , Be lin, Vol. 105, Iss. 5, pp. 565-588, h ps://doi.o g/10.3790/schm.105.5.565 This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/291619 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen (insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en, gel en abweichend on diesen Nu zungsbedingungen die in de do genann en Lizenz gewäh en Nu zungs ech e. Te ms o use: Documen s in EconS o may be sa ed and copied o you pe sonal and schola ly pu poses. You a e no o copy documen s o public o comme cial pu poses, o exhibi he documen s publicly, o make hem publicly a ailable on he in e ne , o o dis ibu e o o he wise use he documen s in public. I he documen s ha e been made a ailable unde an Open Con en Licence (especially C ea i e Commons Licences), you may exe cise u he usage igh s as speci ied in he indica ed licence. h ps://c ea i ecommons.o g/licenses/by/4.0/ Wha do we know abou Cu ency Compe i ion? By Ma in F. Hellwig* The pape p esen s a c i ical analysis o he p oposals o Hayek and Vau- bel o un egula ed compe i ion among p i a e money supplie s. Because o ex e nali ies, ime inconsis encies and mo al haza d, hese p oposals a e de imen al o ou side money and, a bes , dubious o inside money. I am skep ical abou he p ice heo e ical ounda ions o Vaubel's1 policy ecommenda ions. This skep icism ex ends o he wo k o on Hayek (1976, 1977), which ini ia ed ou cu en conce n wi h he op imal mone a y cons i u ion. Speci ically, I ha e he ollowing p o- blems wi h he Hayek-Vaubel analysis. A. Bo h, Hayek and Vaubel, neglec he dis inc ion be ween inside and ou side money. Thei discussion o compe i ion among ou side monies is based on an in alid p emise. B. The e a e Pa e o- ele an ex e nali ies in money demand decisions which jus i y he use o lumpsum axa ion o c ea e a eal e u n on money. C. In con as o he ma ke o an inside money, he ma ke o an ou side money is des oyed by he coexis ence o mo e han one i m in he ma ke . D. Vaubel and Hayek ail o dis inguish be ween he dynamic p oblem o ime inconsis ency and he s a ic p oblem o monopoly powe . In he absence o binding money supply announcemen s, he ime in- consis ency o p o i maximizing policies ules ou any un egula ed p i a e o ganiza ion o he ma ke o ou side money. E. The analysis o compe ing inside monies pays oo li le a en ion o he p oblems o unce ain y, in o ma ion asymme ies, and ime in- consis ency ha a e endemic o deb o -c edi o ela ions. In he ollowing, I shall discuss hese poin s one by one. * This pape was p esen ed as a commen on Vaubel (1985) a he May 1984 mee ing o he Ausschuß ü Geld heo ie und Geldpoli ik o he Ve ein ü Socialpoli ik. I hank Michael Rey o esea ch assis ance and he Deu sche Fo schungsgemeinscha o inancial suppo h ough Sonde o schungs- be eiche 21 and 303. 1 Vaubel's analysis o ex e nal e ec s in he money ma ke is p esen ed in Vaubel (1984). My commen s he e co e ha analysis as well because a he May 1984 mee ing, i was p esen ed as an in eg al pa o he a gumen . 37* OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 566 Ma in F. Hell wig 1. Inside e sus Ou side Money We mus dis inguish be ween inside money, which gi es i s bea e a legal claim agains he issue , and ou side money, which en ails no such claim. Supplie s o inside money a e cons ained by he need o ul ill hei obliga ions o else go bank up . Supplie s o ou side money a e unde no such cons ain . P esumably hen, he beha iou o a money supplie will depend on whe he he issues inside o ou side money.2 The dis inc ion be ween inside and ou side money will also a ec he demand o money. My willingness o hold pape ou side money depends only on he p ospec o selling his pape ou side money o somebody else, who in u n is willing o pay a posi i e p ice only because he hopes o esell i o a hi d agen , who ... In con as , he decision o pay a posi i e p ice o inside money is a leas pa ly mo i a ed by he p o- spec o calling he claim on he issue . The shopkeepe accep s my check — no because he expec s o esell i o his wholesale , bu because he will p esen i o my bank. Whe eas he eal alue o ou side money is exclusi ely de e mined by esale conside a ions, i.e. by expec a ions o i s eal alue in u u e ansac ions, he eal alue o inside money will depend on he " undamen als" o he unde lying claim agains he issue . Any posi i e o no ma i e analysis o he mone a y cons i u ion mus ake accoun o his di e ence. Hayek and Vaubel neglec i , appa en ly because hey belie e ha he exis ence o ou side money i sel is me ely a consequence o go e nmen in e e ence wi h he mone a y sys em. Acco ding o his iew, un egula ed cu ency compe i ion would lead o he disappea ance o ou side money and i s eplacemen by inside money as a supe io asse .3 Howe e , as a as I can see, his poin emains o be p o ed. Mo e- o e , i is no clea ha such an ou come is in ac desi able. Fo he economy as a whole, he use o pape money may be ad an ageous because i economizes on he holding o eal asse s. In a pu e inside money economy, his ad an age is pa ly los because he supplie o money mus hold a ese e agains he claims on him. In he absence o ou side money, his ese e will consis o eal asse s such as gold, 2 In s essing his dis inc ion, I do no ake issue wi h Johnson's (1969) p oposi ion ha " he eal heo e ical di e ence o be d awn is be ween in e es -bea ing and nonin e es -bea ing money". Johnson was conce ned wi h he de e mina ion o he economy's ne weal h a he han he beha- iou o money supplie s. E en in he con ex o his analysis, he dis inc ion be ween inside and ou side money is appa en in he inside money supplie s' need o hold ese es agains wi hd awels. 3 This p oposi ion was explici y asse ed by Vaubel in he o al discussion ollowing he p esen a ion o his pape and my commen s. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 567 machines, sha es, e c. Qui e possibly hen, he pu e inside money eco- nomy may be ine icien because i in ol es an oue accumula ion o eal asse s. To make his poin p ecise, conside he p ecau iona y money holding model o Bewley (1980, 1982) and mysel (1980, 1982). In his model, agen s wi h unce ain commodi y endowmen s sa e and hold asse s o sel -insu ance agains u u e endowmen luc ua ions. These agen s' po olio choices be ween money and commodi y in en o ies depend on hei expec a ions abou eal a es o e u n. Agen s will be indi e en be ween money and in en o ies i bo h asse s ha e a ze o own a e o e u n and i p ices a e non andom and cons an o e ime. A mone a y a ional expec a ions equilib ium wi h non andom, cons an p ices does in ac exis i he endowmen isks o di e en indi iduals cancel ou so ha all economic agg ega es a e non andom. In his equilib ium, he use o pape money as a s o e o alue enables he sys em o economize on commodi y in en o ies. This sub- s i u ion o money o in en o ies is use ul because commodi y in en- o ies equi e a de e al o consump ion and he eby in ol e a eal cos . Up o his poin , he a gumen does no depend on whe he we a e dealing wi h an ou side money which happens o ha e a non andom, cons an pu chasing powe o an inside money whose pu chasing powe is suppo ed by an ins an epu chase p omise o he issue . In he ab- sence o agg ega e luc ua ions, he inside money issue need no hold any in en o ies because in each pe iod, he public's demand o his money jus balances he a ailable supply.4 Howe e , i money does no bea in e es , he p i a e incen i es o holding money a e oo small o Pa e o op imali y.5 In he p esen con- ex , he use o non-in e es -bea ing money as a bu e s ock does no yield pe ec insu ance o indi idual isks e en hough such pe ec insu ance would be easible. I we a e dealing wi h a go e nmen supplied ou side money, hen he alloca ion can be imp o ed by using he go e nmen 's powe o ax in o de o c ea e a posi i e eal e u n on money.6 This de ice is no a ailable o a p i a ely supplied inside 4 The subs i u ion o a money wi hou backing o a money wi h backing is pe haps bes illus a ed in he s o y, old by Pe e Kenen, o he island which used sa dine cans o money. A ou is once opened a can, ound he sa dines inedible, and complained o he pe son who had gi en him he can. The answe was: "The e is no hing o complain abou . I ga e you money sa dines. I you wan ed ood sa dines, you should ha e gone o he supe - ma ke !" s F iedman (1969), Johnson (1969), (1970). e Hellwig (1982). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 568 Ma in F. Hellwig money. Such a non-in e es -bea ing inside money would in ac be dis- placed by any go e nmen supplied ou side money which has a posi i e eal e u n.7 Fu he mo e, e en wi hou in e es paymen s on money, he equi- alence o inside and ou side money disappea s i he unde lying un- ce ain y in ol es collec i e as well as indi idual isks. In his case, he eal quan i y o money ha he economy wan s o hold will luc ua e wi h he collec i e endowmen ealiza ion. The e o e, he supplie o an inside money mus expec ha wi h posi i e p obabili y he claims on him will be called. I he inside money ep esen s a claim o eal commodi ies, he mus be p epa ed o ac ually deli e hese commodi ies. I he wan s o be su e o a oid bank up cy — i.e. a de aul on his p o- mise — hen he ypically needs o hold a 100 %> ese e agains his money issue.8 In equilib ium hen, inside money will ha e he same e u n s uc u e as he unde lying eal asse o which i is a claim. Whe he such an inside money can coexis wi h a non-in e es -bea ing ou side money depends on (i) he ex en o collec i e isk and (ii) he own a e o e u n and he ca ying cos o in en o ies. The non-in- e es -bea ing ou side money is displaced by in en o ies o an inside money backed by in en o ies i he own a e o e u n on in en o ies is ze o; i is no so displaced i in en o ies ha e a high ca ying cos so ha hei own a e o e u n is close o — 100 %>.9 E en in hose in- s ances in which a non-in e es -bea ing ou side money is displaced by an inside money wi h a alue gua an ee o epu chase clause, his esul is socially undesi able. In his case, he po olio choice be ween ou side money and in en o y-backed inside money is biased agains he o - me despi e he po en ial alloca ional ole o pape ou side money as a socially cos less bu e s ock agains indi idual, i.e. insu able endow- men isks. As in he case o pu ely indi idual isks, wel a e would be inc eased by he in oduc ion o a ax- inanced eal e u n on ou side money. 7 The a gumen in he ex is based on he assump ion ha commodi y in en o ies wi h a ze o own a e o e u n a e he only asse in he model. I we in oduce eal capi al wi h a neoclassical p oduc ion unc ion, he a gumen mus be modi ied along he ollowing lines (due o T uman Bewley in p i a e co espondence): Any non-in e es -bea ing money is displaced by eal capi al o by an inside money which p omises he same eal e u n as eal capi al and is backed by eal capi al. Howe e , because o he p ecau - iona y demand o sa ing, he e would be an o e accumula ion o capi al o a poin whe e he ne ma ginal p oduc o capi al is less han he a e o ime p e e ence in consump ion. Again, wel a e can be inc eased by he in o- duc ion o an in e es -bea ing ou side money which is backed by he go e n- men 's powe o ax. s The p oblem o de aul by an issue o inside money, which is neglec ed by Hayek and Vaubel will be aken up in Sec ion 6 below. » Hellwig (1980). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 569 In summa y, i we a e in e es ed in he impac o compe i ion on he mone a y sys em, we mus conside bo h, ou side and inside monies, and we mus be ca e ul o d aw he dis inc ion be ween hem. 2. Compe i ion among Ou side Monies Bo h Hayek (1976) and Vaubel add ess he p oblem o compe i ion among ou side monies when hey conside " he case o ee cu ency compe i ion among cen al banks". They claim ha such compe i ion "encou ages less in la iona y mone a y policies" because he cu ency wi h he lowes in la ion a e will be he mos a ac i e o a public ha is ee o choose among he di e en cu encies. This claim es s on he implici assump ion ha each issuing bank can a leas pa ially con ol he in la ion a e o i s own cu ency h ough i s supply beha iou . This p emise is in alid. To illus a e he basic p oblem, I conside an example o compe i ion among wo "cu encies" ha is aken om he ecen pas . The i s Table 1 Annual G ow h Ra es o e P eceding Yea Rela i e P ice "Cu ency 1" "Cu ency 2" 1970 6,6 0,6 2 1971 9,5 1,8 2 1972 13,6 6,9 2 1973 5,3 - 1,2 2 1974 9,1 2,0 2 1975 9,1 3,5 2 1976 6,2 2,7 2 1977 12,0 6,0 2 1978 11,7 7,2 2 1979 5,0 2,0 2 1980 5,0 2,3 2 1981 0,1 - 0,7 2 Cumula i e G ow h 1970 - 1981 128 °/o 38 o/o Sou ce: S a is isches Jah buch ü die Bundes epublik Deu schland. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 570 Ma in F. Hellwig wo columns o Table 1 show he e olu ion o he ou s anding quan i ies o he wo "cu encies". O e he pe iod 1970 o 1981, "cu ency 1" g ew by mo e han h ee imes as much as "cu ency 2". Ye he las column shows ha he ela i e p ice o he wo "cu encies" did no change. In each pe iod, wo uni s o "cu ency 2" we e ea ed as a pe ec sub- s i u e o one uni o "cu ency 1". In acco dance wi h he Hicks-Leon- ie agg ega ion heo em, bo h "cu encies" we e in ac ea ed as pa s o a single composi e cu ency: In la ion conce ned his composi e cu ency as a whole a he han i s indi idual componen s. The abo e a e age g ow h a e o "cu ency 1" p obably aised he in la ion a e o he composi e cu ency and hence he common in la ion a es o all indi idual componen s; i did no induce an abo e a e age in la ion o "cu ency 1". In his example, "cu ency 1" a e blue pieces o pape on which he Bundesbank has p in ed he numbe "100"; "cu ency 2" a e b own pieces o pape on which he Bundesbank has p in ed he numbe "50". We mus now see o wha ex en he analysis o his example can also be applied o ou side monies ha a e issued by di e en agencies which compe e wi h each o he . Fi s we need o no e ha he ela i e p ice o wo DM 50,— bills o one DM 100,— bill is in ac a ma ke p ice. One migh objec ha DM 100,— is wice DM 50,— me ely as a ma e o a i hme ic. Howe e , he e we a e no conce ned wi h a i hme ic bu wi h he p ice a which blue and b own pieces o pape , i.e. di e en physical objec s, a e ex- changed in ac ual ansac ions. I you need o make an eme gency phone call om a public phone boo h a nigh , you may ind you sel willing o pa wi h a DM 10,— bill o much less han he en DM 1,— coins ha would be indica ed by a i hme ic.10 Simila ly, he sca ci y o I alian 5 and 10 li e pieces is due o he ac ha he cen al bank's a i hme ic s ands in no ela ion o he alue o he nickel con ained in hese coins. Once he ela i e p ice o DM 100,— and DM 50,— bills is seen as a ma ke p ice, we mus ask why he ma ke seems o con o m so well o he Bundesbank's a i hme ic. The Bundesbank's eadiness o in e ene in suppo o he exchange a e o wo DM 50,— bills o one DM 100,— bill p o ides only pa o he explana ion o his phenomenon. A e all, he e was a ime when he Bundesbank also s ood eady o suppo an exchange a e o DM 4,— o 1,— US I was signi ican ly less suc- io A he ime o he opening o he hen ul amode n Dallas-Fo Wo h ai po , he ai po adminis a ion ied o cash in on his obse a ion by ins alling money-change machines ha e u ned 90 c in coins o a 1 $ bill. A e conside able public p o es , hey had o abandon he idea. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 571 cess ull hen. Mo eo e , we obse e ha he Bundesbank ha dly e en needs o in e ene in he ma ke o DM 50,— o DM 100,— bills. Wha would happen, i i did no in e ene a all? I submi ha e en in he absence o cu en o expec ed u u e in e en ions by he Bundesbank, he ma ke migh clea a he cons an ela i e p ice o wo DM 50,— bills o one DM 100,— bill. Fo conside any agen who expec s wo pape ou side monies o ha e a ela i e p ice x in all u u e ansac ions. This agen will ega d x uni s o one cu ency as a p e ec subs i u e o one uni o he o he cu ency. I he cu en ela i e p ice o he wo cu encies is also x, he will be indi e en be ween hem; i he cu en ela i e p ice di e s om x he agen will ha e a s ic p e e ence o one o he wo cu encies. I he expec ed p ice x is he same o all agen s, he cu en equilib ium p ice mus also be x since o he wise no agen would be willing o hold he cu ency ha is oo expensi e. I a all imes all agen s expec wo DM 50,— bills o exchange o one DM 100,— bill in all u u e ansac ions, hen wo DM 50,— bills will exchange o one DM 100,— bill in all ac ual ansac ions e en i he Bundesbank does no in e ene a all. Thus he ixed exchange a e o wo DM 50,— bills o one DM 100,— bill will co espond o a a ional expec a ions equilib ium. Howe e , he same a gumen shows ha i he e is no Bundesbank in e en ion, hen any o he ixed exchange a e beween DM 50,— and DM 100,— bills will also co espond o a a ional expec a ions equili- b ium. Mo e gene ally, any economy wi h mul iple ia monies whose use in di e en ansac ions is no subjec o exogenous cons ain s will ha e mul iple a ional expec a ions equilib ia (p o ided i has any a ional expec a ions equilib ium a all). Fo any ec o o exchange a es x > 0, such an economy will ha e an equilib ium in which all ansac ions ake place a he ixed exchange a es x.11 This analysis is di ec ly applicable o he Hayek-Vaubel discussion o cu ency compe i ion among cen al banks. A p esen o cou se, a dolla bill and a DM coin canno be used side by side in all ansac ions. Howe e , he Hayek-Vaubel p oposal aims p ecisely a li ing hose es ic ions which limi he use o dolla s in Ge many and o ma ks in he Uni ed S a es. I his p oposal is ealized, hen he wo cu encies will ci cula e side by side and hei ela i e accep abili y in an in- di idual ansac ion will depend only on he pa icipan s' expec a ions abou hei ela i e esale alue in u u e ansac ions. In such a wo ld, he e can be no sys ema ic di e ences in in la ion a es be ween ou side monies: Any an icipa ion ha he ma k will be ela i ely wo hless in he u u e mus make i ela i ely wo hless oday al eady. 11 Fo mal analyses o his p inciple a e p esen ed by Gi on / Rope (1981). Hellwig (1976), Ka eken and Wallace (1981). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 572 Ma in F. Hellwig 3. Ex e nal E ec s in Money Demand12 I now conside he ques ion whe he money gi es ise o Pa e o- ele an ex e nal e ec s. I will be con enien o dis inguish be ween he ex e nal e ec s in money demand and he ex e nal e ec s in he decision o use money a he han ba e . Fi s , I mus ake issue wi h bo h F iedman's (1969) o mula ion and Vaubel's c i icism o he p ice-le el ex e nali y o money demand. Bo h au ho s use he language and he ools o s a ic equilib ium heo y o wha is essen ially a non-s a ic, sequen ial p oblem. Unlike a e ige a- o , money is no an asse ha one buys once in o de o hold i o e e and o enjoy he "liquidi y se ices" ha i yields. Ins ead, money is aded back and o h: one acqui es i , hen esells i , acqui es i again, e c. "Liquidi y se ices" do no a ise om he possession o money as such, bu om he ease wi h which money can be esold. I one expec s ha wi h p obabili y one, one will ne e ac ually use his esale op- po uni y, hen one has no eason o hold money in he i s place. The use o money mus he e o e be analysed in a amewo k o sequen ial, incomple e ma ke s a he han he usual se o simul aneous, comple e ma ke s. In he sequen ial amewo k, he di e en pe iods and oc- casions in which agen s ade money mus be ied oge he by he con- cep o a a ional expec a ions equilib ium, i.e. an "equilib ium o plans, p ices, and p ice expec a ions".n In such a non-s a ic se ing, he e is no p esump ion ha pecunia y ex e nali ies a e Pa e o-i ele an .14»15 Fo conside he e ec s o an inc ease in some indi idual's demand o money in pe iod . F om he pe spec i e o pe iod , his demand inc ease aises he alue o money in ha pe iod, he eby con e ing a posi i e pecunia y ex e nali y on all ne selle s and a nega i e pecunia y ex e nali y on all ne buye s o money in money in pe iod . Ce e is pa ibus, Vaubel is igh in ob- se ing — agains he o mula ion o F iedman (1969) — ha hese pecunia y ex e nali ies a e Pa e o-i ele an . Howe e , om he pe spec i e o pe iod — 1, he inc ease in he ( eal) alue o (nominal) money in pe iod se es o aise he indi ec expec ed u ili y associa ed wi h money holdings a he end o pe iod — 1. In e ms o he empo a y equilib ium o pe iod — 1, his e ec is a non-pecunia y ex e nali y and is de ini ely Pa e o- ele an . I ends o aise he equilib ium alue o money in pe iod — 1, which in 12 See Foo no e 1. 13 Radne (1972). 14 See, e. g., Sci o sky (1954), 184 . is Con a y o oo no e 14 in Vaubel (1984), a main poin o Sci o sky's classic pape is he Pa e o- ele ance o pecunia y ex e nali ies ou side he na ow amewo k o s a ic equilib ium heo y. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 579 The ques ion is how he anchise is o be awa ded. I he e is no con lic abou he anking o any wo bids {M],T}} and {M^, T?}, hen he egula o y commission should simply awa d he anchise o he bidde whose bid is (unanimously) anked highes . The bidde s a e hus in ol ed in a ype o Be and game in which hey make "con ac " o e s and " he public" chooses whiche e con ac maximizes i s u ili y. The usual Be and a gumen shows ha in an equilib ium o his game, he winning bid mus be he one ha is mos highly anked among all hose ha a e echnically easible and do no impose a ne loss on he bidde . In con as o he un egula ed monopoly, he app oach would always lead o he second bes mone a y policy, i.e. he one ha is bes among all policies ha do no ely on he go e nmen 's powe o ax. Mo e- o e , in his app oach e en he seignio age would no s ay wi h he winning bidde bu would be channelled back o he economy h ough he seignio age axes T . The p eceding analysis has i s weak spo in he assump ion o una- nimi y among he use s o money. In gene al, he e is no eason o expec such unanimi y. Di e en people wi h di e en as es will ha e di e en iews abou mone a y policies and he dis ibu ion o seign- io age. In his case, he c i e ia o he egula o y commission become p oblema ic. Howe e , he dis ibu ional con lic s ha a ise a e no di - e en han he dis ibu ional con lic s a ising in any o he a ea o collec- i e choice, o , mo e na owly, in any o he egula o y p oblem. The p oblem o egula ing he supply o ou side money no longe is a p ob- lem sui gene is, bu i has been b ough in o he con ines o adi ional public choice and wel a e analysis. E en i one is pessimis ic abou he possibili y o esol ing he dis ibu ional issues ha a ise, one may s ill expec ha a commission o he so ha is sugges ed will pay a he mo e a en ion o he public's a e sion o in la ion and less a en ion o he money supplie s' desi e o seignio age han an en i ely un- egula ed monopoly. 5. The P oblem o Time Inconsis ency I now u n o wha is p obably he mos impo an p oblem o any mone a y cons i u ion. Up o now, I assumed ha he sequence o money supplies is announced be o e he i s pe iod and ha his announce- men canno be e oked in any la e pe iod. In p ac ice he e is no eason why such ini ial announcemen s should be binding a la e da es. The ques ion hen is how he money ma ke beha es in he absence o binding announcemen s o u u e money supplies. 38 Zei sch i Wi scha s- und Sozialwissenscha en 1985/5 OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 580 Ma in F. Hellwig I ini ial announcemen s a e no binding, he op imal policy p ecom- mi men {M } o an un egula ed p i a e monopoly ha was discussed in Sec ion 4.1 no longe is an equilib ium. This conclusion is ob ious in hose cases in which he money supplies M a e cons an and ¡u = 0 o all . Wi h ze o money g ow h, he monopolis ea ns he e enue zq Mo in pe iod ze o and no hing he ea e . F om he pe spec i e o pe iod 0, his may be a good policy because ze o money g ow h and ze o in la- ion in la e pe iods enhance he eal e enue m Mo in pe iod 0. F om he pe spec i e o pe iod 1, he e enue coMo o pe iod 0 is o e e bygone and does no en e in o he monopolis 's conside a ions any mo e. F om he pe spec i e o pe iod 1 he ze o money g ow h policy con inua ion wi h ze o e enues in all pe iods = 1 is domina ed by a policy o posi i e money g ow h and posi i e e enues in some pe iods. Mo e gene ally, le {M } be he op imal policy p ecommi men o he p i a e monopolis , and ecall ha his policy yields he eal e enues So in pe iod 0 and-^—S in pe iod ¡> 1, whe e pn = (M — M -i)/M -i 1 + a is he money g ow h a e and So, Si, ... a e he economy's eal money demands in pe iods 0,1, ... a he gi en a es o e u n. Fo a gi en quan i y o money Mo in pe iod 0 and gi en money g ow h a es pn o ^ 2, he quan i y o money Mi in pe iod 1 a ec s only he eal money U demand So in pe iod 0 and he seignio age income — Si in pe iod 1. 1 + iu The seignio age income is an inc easing unc ion o ¡x and hence, o gi en M0, o Mi. Ne e heless, om he pe spec i e o pe iod ze o, i is no desi able o se ju = oo because a la ge alue o Mi en ails a low eal alue o money 7i = Si/Mi a da e 1, and unde a ional expec a- ions, a low eal alue o money no a da e 0. (I in en o ies ha e no ca ying cos s, a bi age be ween in en o ies and money ensu es o = ; i a bi age conside a ions impose no bound on he a e o in la ion, in e empo al subs i u ion will educe So.) Howe e , om he pe spec- i e o pe iod 1, his conside a ion plays no ole, and he e enue "maximizing" policy equi es an in ini e money g ow h a e. The basic a ionale o he a gumen is e y simple: A any da e , a ixed pa e n o money g ow h a es jLi + i, pi • • • induces a ce ain pa - e n o expec ed in la ion a es, which de e mines he eal esou ces S ha he economy is willing o spend on i s money holdings a he end o pe iod . These eal esou ces S a e sha ed be ween he monopolis LL 1 and he p e ious holde s o money in p opo ions and . By 1 + 1 + * making pn inde ini ely Za ge, he monopolis can disp op ia e he p e- ious money holde s and aise his po ion o he quan i y S ha goes in o money. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 581 In gene al hen, he monopolis 's e enue-maximizing policy is ime- inconsis en 25 because in la e pe iods, he monopolis wan s o de ia e om his policy. I ollows ha he monopolis 's ini ial announcemen will no ac ually be c edible unless he can de ise an ins i u ion ha makes his announcemen binding. Mo eo e , i is now easy o see ha in he absence o binding p e- commi men s abou u u e money supplies, he e canno be any equilib- ium in which he alue o money is posi i e. The p eceding a gumen s show ha no ma e wha si ua ion we a e conside ing, as o pe iod , he monopolis has an incen i e o make M and JLi a bi a ily la ge (and hence n a bi a ily close o ze o). Unde a ional expec a ions, his u u e beha iou o he monopolis is an icipa ed by he ma ke . Wi h his an icipa ion, he ma ke se s S = nx = 0 o < because nobody wan s o spend eal esou ces on an asse ha will be made wo hless by he monopolis 's u u e beha iou . In gene al S = n = 0 o all is he only possible equilib ium. In summa y, an un egula ed p i a e monopoly wi hou binding com- mi men s des oys he use o ou side pape money jus as su ely (and by almos he same a gumen ) as he coexis ence o se e al compe ing ou side money supplies.26 I conjec u e ha his conclusion does in ac hold o any un egula ed p i a e o ganiza ion o a ma ke o ou side pape money. I also belie e ha he p oblem o ime inconsis ency bede ils any go e nmen un o egula ed mone a y sys em. This is ob ious i he go e nmen i sel beha es like a e enue-maximizing monopolis . Mos o on Hayek's (1977) his o ical o e iew illus a es he e y con lic be ween he mone a y s abili y ha is p omised o make money accep - able and he money g ow h ha is gene a ed la e o aise e enues. Howe e , ime inconsis ency would p obably be a p oblem e en i he go e nmen we e un by wel a e economis s who do no y o maximize seignio age e enue pe se. Fo conside again he model o Be and compe i ion among po en ial money supplie s ha was dis- cussed in Sec ion 4.3. Suppose ha he egula o y commission has awa ded he anchise o a i m wi h a bid {M , . In pe iod 0, 25 This ime-inconsis ency was i s discussed by Cal o (1978). Fo he gene al p oblem o ime-inconsis ency o monopoly in a du able goods ma - ke , see Coase (1972) and S okey (1981). 20 See Coase (1972) on he analogy be ween he du able goods monopoly and pe ec compe i ion. Because o he peculia i y o money, he conclusion he e is e en s onge han Coase's, which holds only i he ime span be ween subsequen ma ke da es is small, see S okey (1981). 38» OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 582 Ma in F. Hellwig he ini ial money supply Mo and seignio age ax To a e implemen ed. Now in pe iod 1, he winning i m (o some o he i m) p esen s a new bid {M , T*)~=0 o he egula o y commission, which i inds p e e able because he ne seignio age e enues n (M — T ) unde he new policy a e highe han he ne seignio age e enues n (M — T ) unde he old policy. How will he egula o y commission eac o his new bid? A his poin , he e is going o be an impo an dis ibu ional con lic in he economy: Those who ha e held money om pe iod 0 will objec o any inc ease in he quan i y o money Mi because i educes he alue o hei own money holdings; hose who do no hold any money will no objec unless he new p oposal also aises he in la ion a e om pe iod 1 o pe iod 2 and he eby wo sens he in e empo al p ice a io wi h which hey a e aced. The la e agen s will ac ually a ou he p o- posed policy change i hey can sha e in he spoils by ob aining a la ge po ion o he seignio age ax Ti. The egula o y commission's eac ion o he p oposed change in mone a y policy will he e o e depend on he commission's composi ion and on i s ules o p ocedu e. Speci ically he ques ion is how he com- mission's ules o p ocedu e adjudica e he dis ibu ional con lic be- ween money-holde s and non-money-holde s.27 The mos conse a i e ule would equi e unanimi y o any changes in policy and would he eby gi e ei he g oup an e ec i e e o. A unanimi y equi emen would p obably elimina e he p oblem o ime inconsis ency by making i impossible o change mone a y policy. On he o he hand, a unanimi y equi emen will make i ha d o ag ee on a winning bid in he i s place. Mo eo e , i .migh be desi able o discipline he i m ha has been awa ded he money supply anchise by h ea ening o gi e he anchise o ano he bank i i ails o comply wi h he e ms o he con ac . I such a mo e equi es an unanimous ag eemen by all membe s o he commission, hen he h ea is no e y e ec i e, and he exis ing supplie o ou side money can y o iola e he e ms o he winning bid wi hou much ea o epe cus- sions. Howe e , o any o ing ule ha does no equi e unanimi y o decisions abou mone a y policy, ime inconsis ency is likely o be a p oblem. I suspec ha ime inconsis ency is indeed he deepes and leas sol able p oblem o he mone a y cons i u ion. 27 In Sec ion 4.3, his dis ibu ional con lic played no ule because p io o he de e mina ion o he winning bid he e we e no ye any money holde s. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 583 6. Compe i ion among Inside Monies To conclude he discussion, I b ie ly conside compe i ion among in- side monies, i.e. among monies whose issue s gi e hei clien s a claim o some so o o he . In he simples case, he holde o an inside money has he igh o ob ain a ce ain speci ied quan i y o a eal good, an asse , o ano he money upon demand o a some p especi ied da e. The Hayek-Vaubel no ion o a " alue gua an ee" is a bi mo e complica ed because i does no seem o in ol e a legal claim o he money holde on he money issue . Ins ead, he alue gua an ee is publicly announced as he guiding p inciple o u u e policy.28 How- e e , as long as he money issue ul ils his obliga ion, i does no ma e whe he he obliga ion a ises om a policy announcemen o om a legal claim. The dis inc ion ma e s only when he money issue de aul s on his p omise and he ques ion is how one can make him pay. I we accep he usual ea men o demand deposi s as "money", we see ha mos coun ies al eady ha e some compe i ion among inside monies. Howe e , his compe i ion is igidly egula ed by he go e n- men . The Hayek-Vaubel p oposal amoun s o an ou igh aboli ion o all go e nmen egula ion o his sec o . In pa icula , hey wan o abolish he ollowing egula ions: a) The ban on he issue o p i a e bank no es ha can ci cula e as money. b) The equi emen o hold (minimum) ese es in cen al bank money. c) The equi emen o denomina e he p i a e money issue 's obliga ion in uni s o cen al bank money. I should wholehea edly suppo hese p oposals i we li ed in a wo ld in which all agen s a e comple ely in o med abou e e y hing and all con ac s and p omises a e always honou ed. Un o una ely, he e y use o money has o do wi h he ac ha we do no li e in such a wo ld. Gi en he impe ec ions and unce ain ies o ac ual ma ke s, I see no conclusi e e idence ei he agains o o go e nmen egula ion o he banking sys em and he ma ke o inside money. Economic heo y simply has oo li le o say on hese ma e s o wa an any i m conclusions o he so Hayek and Vaubel wan o d aw. The ela ion be ween he holde and he issue o an inside money is akin o ha be ween a c edi o and a deb o . This ela ion is p o- blema ic because when he con ac is made he c edi o su ende s a eal asse and ge s no mo e han a piece o pape wi h a epaymen p omise o he u u e. The whole c edi o -deb o ela ion hinges on 28 Hayek (1977), 31, OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 584 Ma in F. Hellwig he ques ion wha his p omise is going o be wo h. In conside ing his ques ion one mus deal wi h a whole spec um o di icul ies a ising om unce ain y, mo al haza d, asymme ic in o ma ion, and again ime inconsis ency. These di icul ies which bese he heo y o c edi ma ke s a e jus as impo an in he ma ke o inside monies. 6.1 Unce ain y and P oduc He e ogenei y The e u ns ha he bank ea ns on i s own in es men s a e ypically unce ain. The e o e, i s own abili y o ul il i s obliga ions o he hol- de s o i s money is unce ain. The e u ns on inside money will gene - ally be unce ain and will depend on he bank's own in es men policy. In consequence he inside monies issued by di e en banks will be less han pe ec subs i u es o each o he . Inside monies mus be ega ded as a se o di e en ia ed p oduc s a he han a single homogeneous p oduc . Compe i ion among inside monies hen mus be analysed as monopolis ic compe i ion in he sense o Chambe lin a he han pe ec compe i ion. In a wo ld o Chambe linian monopolis ic compe i ion, he e is no p esump ion ha he ma ke ou come has any nice wel a e p ope ies.29 Bo h Vaubel and Hayek a e awa e ha he ma ke o inside monies mus be analysed in e ms o di e en ia ed a he han homogeneous p oduc s. They do no seem o be awa e ha he wel a e p ope ies o monopolis ic compe i ion in a di e en ia ed p oduc s ma ke a e qui e unclea . 6.2 Mo al Haza d and Bank up cy The e u n ha an inside money holde e en ually ge s depends on he beha iou o he issue o he money. I he issue selec s poo in- es men s, he holde o he inside money ge s a poo e u n — like hose deposi o s who su e ed om He s a 's bad cu ency specula ions. I he issue embezzles he company's unds, he holde o he inside money ge s a poo e u n — like hose IOS ce i ica e holde s who su - e ed om M . Vesco's deple ing he und's asse s. In p inciple, he con- ac be ween he issue and holde o an inside money migh p esc ibe he mos ca e ul beha iou on he side o he bank; in p ac ice, he holde has no way o en o cing such a clause. The ecen li e a u e on c edi a ioning and c edi con ac s shows ha many ins i u ional peculia i ies in capi al ma ke s may be in e - p e ed as de ices ha elimina e o educe such ins ances o mo al 29 See, e. g. Ha (1983). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 585 haza d. Thus, he s anda d deb con ac wi h a ixed epaymen obliga- ion and bank up cy i and only i he epaymen obliga ion canno be me may be in e p e ed as he ma ke 's esponse o he mo al haza d ha a ises i he deb o (he e he bank), bu no he c edi o (he e he money holde ) can cos lessly obse e he ealized e u n on he deb o 's in es men .30 In he same se ing, banks as in e media ies may se e o educe he agency cos s o inancing inal eal in es men .31 C edi a ioning wi h bounds on bo h loan sizes and in e es a es may se e o induce less isky in es men policies by deb o s and banks.32 Such de ices educe, bu do no elimina e he p oblem o mo al haza d in inancial ela ions. The cen al issue is ha he beha iou o a deb o , in pa icula he issue o an inside money, exe s an ex e nal e ec on he c edi o , in pa icula he holde o he inside money. Because o his ex e nal e ec , ma ke alloca ions will gene ally no be mo e han n- h bes , and i is unclea whe he go e nmen in e - en ion is ha m ul o use ul. To some ex en , Vaubel seems o see ha mo al haza d migh be a p oblem. He sugges s ha he dange o "p o i sna ching" can be elim- ina ed h ough alue gua an ees ((1985), 554).33 Howe e , he does no see ha such gua an ees hemsel es migh be subjec o mo al haza d and he e o e migh no be c edible. A alue gua an ee, deb obliga ion and he like may elimina e mo al haza d i he penal ies o non-compliance wi h one's obliga ion a e e y la ge. I as in he Vesco-IOS case, he penal ies a e small in compa ison o he gains om noncompliance, hen such obliga ions may simply be i ele an . Mo e e , e en i he penal ies a e la ge enough o elimina e ou igh dishones y, hey may s ill no be la ge enough o ensu e an app op ia e in es men policy ex an e.34 Could i be he case ha minimum ese e equi emen s o banks o in es men egula ions o insu ance com- panies a e jus one admi edly coa se way o "in e nalize" he e ec s ha hese companies' decisions ha e on hei inancie s h ough he isk o bank up cy? 30 Gale / Hellwig (1983). 31 Diamond (1984). 32 Ja ee / Russell (1976), S igli z / Weiss (1981). 33 Vaubel himsel dismisses he Klein-Tullock a gumen ha mo al haza d is less o a p oblem in a epea ed-game se ing in which banks ca e abou hei long un p ospec s. This a gumen equi es ha agen s do no dis- coun he u u e so ha no ma e how la ge he sho u n gains om dis- hones o negligen beha iou may be, hey a e always ou weighed by he in ini e ail o con inued u u e ela ions wi h one's c edi o s. A leas M . Vesco does seem o ha e had a posi i e discoun a e. 34 See, e. g. S igli z / Weiss (1981). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 586 Ma in F. Hellwig 6.3 Mo al Haza d and Time Inconsis ency I a deb o ells his c edi o ha he canno pay, does he c edi o call a bank up cy o does he wai in he hope o sha ing in he deb o 's be e luck in he u u e? Gi en he mo al haza d p oblems discussed abo e, i seems desi able ab ini io o h ea en bank up cy ai ly quickly in o de o induce he deb o o ake ca e o a oid bank up cy. How- e e , a e i has been de e mined ha he deb o canno pay, a leas a p esen , he c edi o may p e e o keep him ali e. I bank up cy is called immedia ely, he c edi o has o w i e o his claims on he deb o . I bank up cy is no called, he e migh be a ime in he u u e when hese claims could be collec ed. The decision o call a bank up cy is hus subjec o ime inconsis ency jus like he op imal supply o ou side money.35 Conc e e examples o hese conside a ions ha e been obse ed in ecen p oceedings conce ning he Ci y o New Yo k as well as he so-called "In e na ional Deb C isis". In hose cases whe e he deb o is a la ge bank and he deb s a e inside money held by he public, he eluc ance o call a bank up cy seems o be especially g ea . In he case o he Con inen al Illinois Bank, i was made clea ha because o ad e se e ec s on he mone a y sys em, a la ge bank would no be allowed o go bank up no ma e how many bad loans i migh ha e made. The p oblem is, o cou se, ha i he banks know his, hen hey ha e no eason o a oid making bad loans. Mo e gene ally, deb o s who know ha hey will no be pu in o bank up cy ha e only weak incen i es o manage hei means ca e ully so as o make su e ha hey can ul il hei obliga ions. In summa y, I belie e ha he ma ke s o inside monies and he la ge se o capi al ma ke s o which hey o m pa a e so eple e wi h ma ke impe ec ions, in o ma ion asymme ies and p oblems o mo al haza d ha we canno make any i m assessmen abou he wel a e p ope ies o he ou comes in such ma ke s. Whe he go e nmen e- gula ion in hese ma ke s is wa an ed a all, whe he i should ake he o m i does ake, is some hing ha a p esen we do no know — unless o cou se we s a om he axiom ha e e y hing would be o he bes in he bes o all possible wo lds i only he go e nmen ceased in e e ing. I we do no accep his axiom, we mus admi ha we simply do no know e y much abou how compe i ion among inside monies wo ks. 35 Hellwig (1977). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 Wha do we know abou Cu ency Compe i ion? 587 Summa y The pape s udies he p oposals o Hayek and Vaubel o un egula ed p i a e compe i ion in he money ma ke . These p oposals a e shown o es on an insu icien dis inc ion be ween inside and ou side money. The exis - ence o an ou side money wi hou a backing is desi able on wel a e g ounds. Howe e , any p i a e supply o ou side money in pe ec compe i ion, Cou - no oligopoly o monopoly would ac ually des oy he use o ou side money. The main p oblem is ha o ime inconsis ency o he op imal money supply policy. P oblems o ime inconsis ency and o mo al haza d a ise also in he ma ke o inside money. Because o hese p oblems, he app op ia eness o un egula ed compe i ion in he ma ke o inside money mus also be doub ed. Zusammen assung Die A bei be aß sich mi den Vo schlägen Hayeks und Vaubels zu Ein- üh ung des We bewe bs im Geldwesen. Es wi d gezeig , daß diese Vo - schläge au eine unzu eichenden Un e scheidung zwischen Außengeld und Innengeld be uhen. Die Exis enz eines Außengeldes ohne Deckung is aus wohl ah s heo e ischen E wägungen wünschenswe . Ein p i a es Angebo an Außengeld im We bewe b, Cou no -Oligopol ode Monopol wü de abe die Funk ions ähigkei des Ma k es ü Außengeld ze s ö en. Zen ales P o- blem is die Zei inkonsis enz jegliche Geldangebo spoli ik. Zei inkonsis enz- p obleme in Ve bindung mi „mo al haza d" e en auch im Ma k ü Innen- geld au und lassen auch hie die Angemessenhei de Vo schläge on Hayek und Vaubel als zwei elha e scheinen. Re e ences Baumol, W., J. Panza and R. Willig (1982), Con es able Ma ke s and he Theo y o Indus y S uc u e. New Yo k. Bewley, T. (1980), The Op imum Quan i y o Money, in: J. Ka eken / N. Wal- lace, Models o Mone a y Economics. Minneapolis. — (1982), A Di icul y wi h he Op imum Quan i y o Money. Econome ica 51, 1485 - 1504. Cal o, G. (1978), Op imal Seignio age om Money C ea ion. Jou nal o Mo- ne a y Economics 4, 503 - 517. Coase, R. M. (1972), Monopoly and Du abili y. Jou nal o Law and Econo- mics 15, 143 - 149. Diamond, D. (1984), Financial In e media ion and Delega ed Moni o ing. Re iew o Economic S udies 51, 393 - 414. F iedman, M. (1969), The Op imum Quan i y o Money, in: M. F iedman, The Op imum Quan i y o Money and O he Essays. Chicago. Gale, D. and M. Hellwig (1983), Incen i e Compa ible Deb Con ac s: The One-Pe iod P oblem. Discussion Pape No. 124, Sonde o schungsbe eich 21. Bonn. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54 588 Ma in F. Hellwig Gi on, L. and D. Rope (1981), Theo y and Implica ions o Cu ency Subs i- u ion. Jou nal o Money, C edi , and Banking 13, 12 - 30. Ha , O. D. (1983), Monopolis ic Compe i ion in he Spi i o Chambe lin: A Gene al Model. Discussion Pape No. 83/82. ICERD, London. Hayek, F. A. . (1976), Choice in Cu ency: A Way o S op In la ion. Ins i u e o Economic A ai s, Occasional Pape 48. London. — (1977), En na ionalisie ung des Geldes. Tübingen. Hellwig, M. F. (1976), A Model o Mone a y Exchange. Discussion Pape No. 202, Econome ic Resea ch P og am. P ince on. — (1977), A Model o Bo owing and Lending wi h Bank up cy. Econome- ica 45, 1879 - 1906. — (1980), P ecau iona y Asse Holding unde Indi idual and Collec i e Risk. Pape p esen ed a he Wo ld Cong ess o he Econome ic Socie y. — (1982), P ecau iona y Money Holding and he Paymen o In e es on Money. Discussion Pape No. 92, Sonde o schungsbe eich 21. Bonn. Ja ee, D. W. and T. Russell (1976), Impe ec In o ma ion, Unce ain y and C edi Ra ioning. Qua e ly Jou nal o Economics 90, 651 - 666. Johnson, H. G. (1969), Inside Money, Ou side Money, Income Weal h, and Wel a e in Mone a y Theo y. Jou nal o Money, C edi , and Banking 1, 30 - 45. — (1970), Is he e an Op imal Money Supply? Jou nal o Finance 24, 435 - 442. Ka eken, J. and N. Wallace (1981), On he In e minancy o Equilib ium Exchange Ra es. Qua e ly Jou nal o Economics 96, 202 - 222. Pesek, B.P. and T. Sa ing (1967), Money, Weal h and Economic Theo y. London. Radne , R. (1972), Exis ence o Equilib ium o Plans, P ices, and P ice Ex- pec a ions in a Sequence o Ma ke s. Econome ica 40, 289 - 303. Sci o sky, T. (1954), Two Concep s o Ex e nali ies. Jou nal o Poli ical Eco- nomy 62, 143 - 151. S igli z, J. and A. Weiss (1981), C edi Ra ioning in Ma ke s wi h Impe ec In o ma ion. Ame ican Economic Re iew 71, 393 - 410. S okey, N. (1981), Ra ional Expec a ions and Du able Goods P icing. Bell Jou nal o Economics 12 (1), 112 - 128. Vaubel, R. (1984), The Go e nmen 's Money Monopoly: Ex e nali ies o Na- u al Monopoly? Kyklos 37, 27 - 58. — (1985), Compe ing Cu encies: The Case o F ee En y. Zei sch i ü Wi scha s- und Sozialwissenscha en 5, 547 - 564. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/schm.105.5.565 | Gene a ed on 2023-04-04 12:05:54