The optimal bankruptcy rule in a trading economy using fiat money

Expansionary macroeconomic policy with a strong redistributive component is an attractive proposition, most recently launched on the basis of Modern Monetary Theory or MMT. The Theory is a synthesis of familiar ideas, newly relevant but scarcely path-breaking. Its basics – Chartalist or fiat money, functional finance, and models based on consistent national accounting – come straight from Maynard Keynes, Abba Lerner, and Wynne Godley. Functional finance is the heart of fiscalist Keynesianism built upon automatic stabilizers for the business cycle. MMT’s job guarantee proposal is one more stabilizer which could be a modest helpful supplement to the system which exists. National accounting comparisons of a possible MMT package with the 2008 crash and the Trump tax cut are presented with emphasis on autonomous shifts in demand. The package could have problems with debt sustainability and external balance. Inflation is unlikely if wage repression in the USA is not reversed. But strong wage increases are presumably a goal of MMT.

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Fiat money and the value of binding portfolio constraints

Economic Theory ◽

10.1007/s00199-009-0510-9 ◽

2009 ◽

Vol 46 (2) ◽

pp. 189-209 ◽

Cited By ~ 9

Author(s):

Mário R. Páscoa ◽

Myrian Petrassi ◽

Juan Pablo Torres-Martínez

Keyword(s):

Portfolio Constraints ◽

Fiat Money

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Monetary Systems

The Oxford Handbook of Banking and Financial History ◽

10.1093/oxfordhb/9780199658626.013.16 ◽

2016 ◽

pp. 320-341

Author(s):

Angela Redish

Keyword(s):

Early Modern ◽

Early Modern Period ◽

Medieval Period ◽

Bretton Woods ◽

Paper Money ◽

Fiat Money ◽

Modern Period ◽

Monetary Systems ◽

Medieval Europe

This chapter presents the evolution of Western monetary systems from the bimetallic standards of medieval Europe through the gold standard and Bretton Woods eras to today’s fiat money regimes. The chapter notes that issues of revenue creation enabled by the monopoly over money issue—through debasement and/or inflation—runs through this history, as does the significance of the credibility of the money issuer. An additional theme in the chapter is the role of changing technology of money issue, from the hammered coins of the medieval period, to the milled coins of the early modern period, through paper money issues to cryptocurrencies.

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A Model of Fiat Money and Barter

10.3386/w4919 ◽

1994 ◽

Author(s):

Fumio Hayashi ◽

Akihiko Matsui

Keyword(s):

Fiat Money

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Essays in applied economics

10.32469/10355/69988 ◽

2019 ◽

Author(s):

◽

Rebecca L. Whitworth

Keyword(s):

Panel Data ◽

Overlapping Generations ◽

Value Added ◽

Bond Market ◽

Applied Economics ◽

Corporate Debt ◽

Overlapping Generations Model ◽

Fiat Money ◽

The Us ◽

Value Added Modeling

This dissertation examines several themes in applied economics. Specifically, Essay 1 examines the dynamics in an overlapping generations model with three-period lived agents, fiat money, and credit, Essay 2 reviews literature on value-added modeling and discusses a paper previously published, Essay 3 concludes by examining efficiency in the US bond market. While Essay 1 examines dynamics and 2 reviews tools used in estimating panel data, Essay 3 combines elements of both-empirically evaluating the efficiency of the bond market by looking at the movement of prices through time. That is, deriving the integral over t of the bond spread. While opportunities for more work exists, this paper suggests that the US Bond Market (the market for corporate debt) is informationally efficient, though it takes longer to converge than previously reported in the literature.

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