We develop a random-matching model to study the price dynamics of monies produced privately according to a time-consuming mining technology. For our leading example, there exists a unique equilibrium where the value of money increases over time and reaches a steady state. There is also a continuum of perfect-foresight equilibria where the price of money inflates and bursts gradually over time. Initially, money is held for a speculative motive, but it acquires a transactional role as it becomes sufficiently abundant. We study fiat, commodity, and crypto monies, endogenous acceptability, and adopt implementation and equilibrium approaches.
Choi, Michael, and Guillaume Rocheteau.
"Money Mining and Price Dynamics."
American Economic Journal: Macroeconomics,
Price Level; Inflation; Deflation
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Money Supply; Credit; Money Multipliers
Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Europe: Pre-1913
Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Europe: 1913-
Economic History: Financial Markets and Institutions: Europe: Pre-1913
Economic History: Financial Markets and Institutions: Europe: 1913-