Money, Bitcoin, and Monetary Policy

Kee Youn Kang; Seungduck Lee

doi:10.1111/jmcb.12992

Money, Bitcoin, and Monetary Policy

Kee Youn Kang, Seungduck Lee

Department of Business Administration

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

Abstract

A search-theoretic model is constructed, where money and Bitcoin can be used as mediums of exchange. We investigate how each currency facilitates transactions and how they compete with each other. Quantitative analysis shows that welfare in an economy with both money and Bitcoin is lower than in a money-only economy due to congestions in the confirmation of Bitcoin transactions and that the welfare gap between the two economies expands as inflation rises. Moreover, an increase in transaction fees for Bitcoin can increase welfare by reducing inefficient Bitcoin transactions.

Original language	English
Journal	Journal of Money, Credit and Banking
DOIs	https://doi.org/10.1111/jmcb.12992
Publication status	Accepted/In press - 2022

Bibliographical note

Publisher Copyright:
© 2022 The Ohio State University.

All Science Journal Classification (ASJC) codes

Accounting
Finance
Economics and Econometrics

Access to Document

10.1111/jmcb.12992

Cite this

@article{fe9d7e4228e74f4e8fce11b4bc3da8d3,

title = "Money, Bitcoin, and Monetary Policy",

abstract = "A search-theoretic model is constructed, where money and Bitcoin can be used as mediums of exchange. We investigate how each currency facilitates transactions and how they compete with each other. Quantitative analysis shows that welfare in an economy with both money and Bitcoin is lower than in a money-only economy due to congestions in the confirmation of Bitcoin transactions and that the welfare gap between the two economies expands as inflation rises. Moreover, an increase in transaction fees for Bitcoin can increase welfare by reducing inefficient Bitcoin transactions.",

author = "Kang, {Kee Youn} and Seungduck Lee",

note = "Publisher Copyright: {\textcopyright} 2022 The Ohio State University.",

year = "2022",

doi = "10.1111/jmcb.12992",

language = "English",

journal = "Journal of Money, Credit and Banking",

issn = "0022-2879",

publisher = "Wiley-Blackwell",

}

TY - JOUR

T1 - Money, Bitcoin, and Monetary Policy

AU - Kang, Kee Youn

AU - Lee, Seungduck

PY - 2022

Y1 - 2022

N2 - A search-theoretic model is constructed, where money and Bitcoin can be used as mediums of exchange. We investigate how each currency facilitates transactions and how they compete with each other. Quantitative analysis shows that welfare in an economy with both money and Bitcoin is lower than in a money-only economy due to congestions in the confirmation of Bitcoin transactions and that the welfare gap between the two economies expands as inflation rises. Moreover, an increase in transaction fees for Bitcoin can increase welfare by reducing inefficient Bitcoin transactions.

AB - A search-theoretic model is constructed, where money and Bitcoin can be used as mediums of exchange. We investigate how each currency facilitates transactions and how they compete with each other. Quantitative analysis shows that welfare in an economy with both money and Bitcoin is lower than in a money-only economy due to congestions in the confirmation of Bitcoin transactions and that the welfare gap between the two economies expands as inflation rises. Moreover, an increase in transaction fees for Bitcoin can increase welfare by reducing inefficient Bitcoin transactions.

UR - http://www.scopus.com/inward/record.url?scp=85141421302&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85141421302&partnerID=8YFLogxK

U2 - 10.1111/jmcb.12992

DO - 10.1111/jmcb.12992

M3 - Article

AN - SCOPUS:85141421302

SN - 0022-2879

JO - Journal of Money, Credit and Banking

JF - Journal of Money, Credit and Banking

ER -

Money, Bitcoin, and Monetary Policy

Abstract

Bibliographical note

All Science Journal Classification (ASJC) codes

Access to Document

Other files and links

Fingerprint

Cite this