NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monetary Rules and Commodity Schemes Under Uncertainty

Stanley Fischer

NBER Working Paper No. 1722 (Also Reprint No. r0763)
Issued in October 1985
NBER Program(s):   EFG

The paper sets out a simple monetary model anduses it to compare alternative monetary systems. Money may be either fiat or gold. Both gold supply and velocity are uncertain. Asset demands are derived from expected utility maximization. I demonstrate the basic argument against a commodity money -- that it wastes resources, show why the optimal growth rate of money may be zero, and compare the behavior of the economy under constant money stock, constant price level, and constant gold price rules. Expected utilityis typically highest under the constant price level rule.

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Document Object Identifier (DOI): 10.3386/w1722

Published: Fischer, Stanley. "Monetary Rules and Commodity Schemes Under Uncertainty," Journal of Monetary Economics, Vol. 17, (1986), pp. 21-35.

 
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