Economists have long argued that inclusive and well-developed financial systems play a critical role in fostering economic growth and development. However, the question of what is the best means of achieving financial development has long remained a puzzle in the development finance literature....

We use a simple model to illustrate that nominal GDP targeting might produce a suboptimal equilibrium if there is a growth-maximizing rate of inflation. Following a shock, we find that targeting nominal GDP might result in lower real GDP growth than the economy could sustainably produce given...

The standard economic approach to considering the effects of a policy tends to neglect the prospect of regulatory ambiguity. I describe four sources of regulatory ambiguity and survey the literature considering the effects of ambiguity on entrepreneurial activity. I also explain how...

In The Curse of Cash, Kenneth Rogoff lists reductions in criminal activity and tax evasion among the primary benefits of eliminating cash. We maintain that, to the extent that individuals are interested in purchasing illicit goods and services or evading taxes, eliminating cash will encourage...

Hayek's evolving thought on gold and the gold standard is complex and, at times, confusing. Hayek initially supported the gold standard and paid special attention to those nations whose central banking policies he viewed as relatively loose. Early on he viewed attempts at stabilization of...

This paper investigates the welfare consequences of bubble policy in a greater-fool bubble model with rational, risk averse investors in an asset market. Some investors may be informed that the asset is overpriced, and try to sell to uninformed buyers. A central bank prevents speculative bubbles...

In a recent article, Yermack (2015) argues that bitcoin is not money because it functions poorly as a medium of exchange, unit of account, and store of value. We offer a more conventional view. We maintain that the standard approach classifies an item as money if and only if it functions as a...

Argentina's experience with inflation targeting lasted only 26 months. In this paper, we study the reason why this regime failed in Argentina and the economic context of its implementation. We find that the main reason was an internal inconsistency in how inflation targeting was implemented, and...

The development of blockchain and cryptocurrency may alleviate the economic strain associated with recession. Economic recessions tend to be aggregate demand driven, meaning that they are caused by fluctuations in the supply of or demand for money. Holding monetary policy as solution assumes...

We develop a theory of self-enforcing monetary constitutions. A monetary constitution is the framework of rules within which money-providing and money-using agents interact. A self-enforcing monetary constitutions is upheld by the agents acting within the system; it thus does not require...