skip to content
The price theory of money, prospero's liquidity trap, and sudden stop : back to basics and back Preview this item
ClosePreview this item
Checking...

The price theory of money, prospero's liquidity trap, and sudden stop : back to basics and back

Author: Guillermo A Calvo; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, ©2012.
Series: Working paper series (National Bureau of Economic Research), no. 18285.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
Fiat money contains the seeds of its own destruction. It has no intrinsic value and, yet, it can be exchanged for valuable consumption and production goods. As Hahn (1965) shows, this situation puts fiat money's market value or liquidity premium at the brink of collapse. In this paper I will argue that (1) sticky prices, especially when staggered, provide output backing to fiat money, helping to sustain fiat money's  Read more...
Rating:

(not yet rated) 0 with reviews - Be the first.

Subjects
More like this

 

Find a copy in the library

&AllPage.SpinnerRetrieving; Finding libraries that hold this item...

Details

Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Guillermo A Calvo; National Bureau of Economic Research.
OCLC Number: 806032758
Notes: Title from http://www.nber.org/papers/18285 viewed August 14, 2012.
"August 2012."
Description: 1 online resource (28 pages).
Series Title: Working paper series (National Bureau of Economic Research), no. 18285.
Responsibility: Guillermo A. Calvo.

Abstract:

Fiat money contains the seeds of its own destruction. It has no intrinsic value and, yet, it can be exchanged for valuable consumption and production goods. As Hahn (1965) shows, this situation puts fiat money's market value or liquidity premium at the brink of collapse. In this paper I will argue that (1) sticky prices, especially when staggered, provide output backing to fiat money, helping to sustain fiat money's liquidity premium and, thus, lowering the risk of a liquidity meltdown. I call this view the Price Theory of Money; (2) fixed-income assets linked to fiat money, especially if they are perceived to have low counter-party risk (like US Treasury bills, AAA bonds or Asset-Backed Securities) can take advantage of point (1) to become quasi-moneys; (3) this gives incentives to the private sector to create those assets; (4) however, unless protected by a Lender of Last Resort, the new assets' liquidity premium can quickly and massively evaporate in what I call (with a wink to the Bard) a Prospero's Liquidity Trap; (5) the latter lowers the market value of loan collateral and clogs the credit channel, bringing about a credit event or Sudden Stop, with severe output and employment consequences.

Reviews

User-contributed reviews
Retrieving GoodReads reviews...
Retrieving DOGObooks reviews...

Tags

Be the first.
Confirm this request

You may have already requested this item. Please select Ok if you would like to proceed with this request anyway.

Linked Data


Primary Entity

<http://www.worldcat.org/oclc/806032758> # The price theory of money, prospero's liquidity trap, and sudden stop : back to basics and back
    a schema:Book, schema:CreativeWork, schema:MediaObject ;
    library:oclcnum "806032758" ;
    library:placeOfPublication <http://id.loc.gov/vocabulary/countries/mau> ;
    library:placeOfPublication <http://experiment.worldcat.org/entity/work/data/1158819012#Place/cambridge_mass> ; # Cambridge, Mass.
    schema:about <http://id.worldcat.org/fast/999682> ; # Liquidity (Economics)
    schema:about <http://id.loc.gov/authorities/subjects/sh89002668> ; # Financial crises
    schema:about <http://experiment.worldcat.org/entity/work/data/1158819012#Topic/money_economic_aspects> ; # Money--Economic aspects
    schema:about <http://id.worldcat.org/fast/924607> ; # Financial crises
    schema:bookFormat schema:EBook ;
    schema:contributor <http://viaf.org/viaf/135446122> ; # National Bureau of Economic Research.
    schema:copyrightYear "2012" ;
    schema:creator <http://viaf.org/viaf/85296566> ; # Guillermo A. Calvo
    schema:datePublished "2012" ;
    schema:description "Fiat money contains the seeds of its own destruction. It has no intrinsic value and, yet, it can be exchanged for valuable consumption and production goods. As Hahn (1965) shows, this situation puts fiat money's market value or liquidity premium at the brink of collapse. In this paper I will argue that (1) sticky prices, especially when staggered, provide output backing to fiat money, helping to sustain fiat money's liquidity premium and, thus, lowering the risk of a liquidity meltdown. I call this view the Price Theory of Money; (2) fixed-income assets linked to fiat money, especially if they are perceived to have low counter-party risk (like US Treasury bills, AAA bonds or Asset-Backed Securities) can take advantage of point (1) to become quasi-moneys; (3) this gives incentives to the private sector to create those assets; (4) however, unless protected by a Lender of Last Resort, the new assets' liquidity premium can quickly and massively evaporate in what I call (with a wink to the Bard) a Prospero's Liquidity Trap; (5) the latter lowers the market value of loan collateral and clogs the credit channel, bringing about a credit event or Sudden Stop, with severe output and employment consequences."@en ;
    schema:exampleOfWork <http://worldcat.org/entity/work/id/1158819012> ;
    schema:inLanguage "en" ;
    schema:isPartOf <http://experiment.worldcat.org/entity/work/data/1158819012#Series/nber_working_paper_series> ; # NBER working paper series ;
    schema:isPartOf <http://experiment.worldcat.org/entity/work/data/1158819012#Series/working_paper_series_national_bureau_of_economic_research> ; # Working paper series (National Bureau of Economic Research) ;
    schema:name "The price theory of money, prospero's liquidity trap, and sudden stop : back to basics and back"@en ;
    schema:productID "806032758" ;
    schema:publication <http://www.worldcat.org/title/-/oclc/806032758#PublicationEvent/cambridge_mass_national_bureau_of_economic_research_2012> ;
    schema:publisher <http://experiment.worldcat.org/entity/work/data/1158819012#Agent/national_bureau_of_economic_research> ; # National Bureau of Economic Research
    schema:url <http://papers.nber.org/papers/18285> ;
    schema:url <http://papers.nber.org/papers/w18285> ;
    wdrs:describedby <http://www.worldcat.org/title/-/oclc/806032758> ;
    .


Related Entities

<http://experiment.worldcat.org/entity/work/data/1158819012#Agent/national_bureau_of_economic_research> # National Bureau of Economic Research
    a bgn:Agent ;
    schema:name "National Bureau of Economic Research" ;
    .

<http://experiment.worldcat.org/entity/work/data/1158819012#Place/cambridge_mass> # Cambridge, Mass.
    a schema:Place ;
    schema:name "Cambridge, Mass." ;
    .

<http://experiment.worldcat.org/entity/work/data/1158819012#Series/nber_working_paper_series> # NBER working paper series ;
    a bgn:PublicationSeries ;
    schema:hasPart <http://www.worldcat.org/oclc/806032758> ; # The price theory of money, prospero's liquidity trap, and sudden stop : back to basics and back
    schema:name "NBER working paper series ;" ;
    .

<http://experiment.worldcat.org/entity/work/data/1158819012#Series/working_paper_series_national_bureau_of_economic_research> # Working paper series (National Bureau of Economic Research) ;
    a bgn:PublicationSeries ;
    schema:hasPart <http://www.worldcat.org/oclc/806032758> ; # The price theory of money, prospero's liquidity trap, and sudden stop : back to basics and back
    schema:name "Working paper series (National Bureau of Economic Research) ;" ;
    .

<http://id.loc.gov/authorities/subjects/sh89002668> # Financial crises
    a schema:Intangible ;
    schema:name "Financial crises"@en ;
    .

<http://id.worldcat.org/fast/924607> # Financial crises
    a schema:Intangible ;
    schema:name "Financial crises"@en ;
    .

<http://id.worldcat.org/fast/999682> # Liquidity (Economics)
    a schema:Intangible ;
    schema:name "Liquidity (Economics)"@en ;
    .

<http://viaf.org/viaf/135446122> # National Bureau of Economic Research.
    a schema:Organization ;
    schema:name "National Bureau of Economic Research." ;
    .

<http://viaf.org/viaf/85296566> # Guillermo A. Calvo
    a schema:Person ;
    schema:familyName "Calvo" ;
    schema:givenName "Guillermo A." ;
    schema:name "Guillermo A. Calvo" ;
    .

<http://www.worldcat.org/title/-/oclc/806032758>
    a genont:InformationResource, genont:ContentTypeGenericResource ;
    schema:about <http://www.worldcat.org/oclc/806032758> ; # The price theory of money, prospero's liquidity trap, and sudden stop : back to basics and back
    schema:dateModified "2018-02-09" ;
    void:inDataset <http://purl.oclc.org/dataset/WorldCat> ;
    .


Content-negotiable representations

Close Window

Please sign in to WorldCat 

Don't have an account? You can easily create a free account.