Inside-Money Theory after Diamond and Dybvig
24 Pages Posted: 16 Dec 2012
Date Written: 2010
Abstract
In this article, I discuss the broad influence of Diamond and Dybvig (1983) in the field of money and banking. My review is centered on two aspects of their sharp concept of liquidity when doing mechanism design in a simple economy with a single resource constraint. It calls into question an old approach in macroeconomics of mixing trading games with market institutions. A comparison with the modern money literature reveals that individuals in that model are strongly monitored. A middle ground between that setting and the anonymity setup of matching models of money without credit should lead to new questions about banking regulation and monetary policy.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Money, Banking, and Monetary Policy
By Ping He, Lixin Huang, ...
-
Liquidity, Money Creation and Destruction, and the Returns to Banking
By Ricardo De O. Cavalcanti, Andres Erosa, ...
-
By Marie Hoerova, Cyril Monnet, ...
-
The Optimal Inflation Target in an Economy with Limited Enforcement
By Gaetano Antinolfi, Costas Azariadis, ...
-
The Optimal Inflation Target in an Economy with Limited Enforcement
By Gaetano Antinolfi, Costas Azariadis, ...
-
The Optimal Inflation Target in an Economy with Limited Enforcement
By Gaetano Antinolfi, Costas Azariadis, ...