We provide a model of an endowment economy with two competing, but intrinsically
worthless currencies (Dollar, Bitcoin). Dollars are supplied by a central bank to achieve its …

We study temporal volatility patterns in seven nominal dollar spot exchange rates, all of
which display strong evidence of autoregressive conditional heteroskedasticity (ARCH). We …

We analyze a two-country economy with complete markets, featuring two national currencies
as well as a global (crypto) currency. If the global currency is used in both countries, the …

This paper makes commodities divisible and incorporates bargaining into the search-
theoretic model of money to determine the purchasing power of money (or price). It is shown …

After remaining close to 1 US Dollar since its inception in November 2020, the algorithmic
stablecoin UST crashed in the two weeks of May 9th to May 15th, 2022, leading to a price …

Publisher Summary Equilibrium with rational expectations is a central construct of modern
economic theory. The chapter studies surveys, which are primarily aimed at assessing the …

This paper studies the behavior of the exchange rate in the Kareken-Wallace overlapping
generations economy with two currencies in which decision rules are updated using the …

In this paper we construct a two-country search model to determine the nominal exchange
rate between two fiat monies. Our model allows agents to use any currency to trade for …

The rise of digital currencies may result in domestic parallel currencies. Their exchange rate
shocks will present a new challenge for monetary policy. We analyze these issues in a New …

Recent years have seen a substantial increase in the volatility of exchange rates. This trend
has prompted economists and finance analysts to question if the observed behaviour of …