Central bank digital currency and fiscal policy in a Diamond-Dybvig Model

Jafar El Armali

After introducing digital currency, the central bank emerges as a monopolist bank. It then faces an "impossible trinity". To achieve price stability and financial stability, optimal consumption allocation is sacrificed. In this paper, I show that fiscal policy designed in coordination with the central bank achieves optimal allocation while maintaining price stability and financial stability.

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Year of publication:	2023
Authors:	El Armali, Jafar
Published in:	Journal of government and economics : JGE. - Amsterdam : Elsevier, ISSN 2667-3193, ZDB-ID 3101387-9. - Vol. 12.2023, Art.-No. 100089, p. 1-3
Subject:	Digital currency \| Fiscal policy \| Price stability \| Finanzpolitik \| Virtuelle Währung \| Virtual currency \| Geldpolitik \| Monetary policy \| Zentralbank \| Central bank \| Preisstabilität

Type of publication:	Article
Type of publication (narrower categories):	Aufsatz in Zeitschrift ; Article in journal
Language:	English
Other identifiers:	10.1016/j.jge.2023.100089 [DOI]
Classification:	E31 - Price Level; Inflation; Deflation ; E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System ; E58 - Central Banks and Their Policies ; E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10014518045