Forthcoming and Accepted Papers
Abstract: This paper uses a search-theoretic model to study conditions under which cryptocurrency is valued and under which it coexists with fiat money. In my model, a cryptocurrency economy is one in which private agents’ decisions determine the stock of money and in which the marginal cost of producing money is increasing in the existing nominal stock. I show that the inflation rate of cryptocurrency must be zero in a stationary monetary equilibrium. This result is in sharp contrast to models with fiat money in which the stock of money is exogenously given. In fiat money economies, the inflation rate is determined by the rate of growth of the money stock. My result is also in sharp contrast with other types of private money economies, in which the inflation rate must necessarily be different from zero. In such private money economies, the cost of producing additional money does not depend on the existing nominal stock. Moreover, I show that cryptocurrency and fiat money can circulate at the same time and that the rates of return on these two assets may not be the same. Competition with cryptocurrency restricts the government’s ability to over-issue fiat money and thereby might improve on pure fiat money equilibria without government commitment.
Keywords: Cryptocurrency, Private Money, Currency Competition, Money Search
Federal Reserve Publications
Federal Reserve Blog Posts
Selected Working Papers / Work in Progress
Abstract: The labor supply of older men increased from the 1930s to the 1950s cohort. This paper explores the role of three Social Security changes in determining these differences: a delayed normal retirement age, increased delayed retirement credits, and a change in the earnings test that was eliminated beyond the retirement age, and evaluates the effects of several proposed reforms to the Social Security program on individuals’ behaviors. I develop and estimate a rich dynamic life-cycle model of labor supply, savings, and Social Security application for healthy and unhealthy people using the Method of Simulated Moments for the 1930s birth cohort. The model captures the key structure of the Social Security retirement benefits, pension systems, and disability insurance, while taking into account uncertainties in health and disability, survival rates, wages, and medical expenditures. My model matches well the observed life-cycle profiles of employment, hours worked by workers, and savings for healthy and unhealthy people from the Panel Study of Income Dynamics data, and generates labor supply elasticities that rise with age and are smaller for healthy workers. It shows that the joint effects of the three changes in Social Security rules account for over 73% of the observed rises in labor force participation and hours per worker by the 1950s cohort. Of the three changed rules, the change in the earnings test contributes the most to the labor dynamics of older men. Additional policy experiments suggest that postponing the retirement age has little effect on older workers, while eliminating the earnings test and reducing retirement benefits by 23% would further increase older-age participation by 3.4 and 5.1 percent, respectively.
Keywords: Social Security reform, retirement, labor force participation, health, older workers