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Float on a note
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DOI：10.1016/j.jmoneco.2005.10.018.png)
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Abstract
En 中文
From 1863-1914, banks in the U.S. could issue notes subject to full collateral, a tax on outstanding notes, redemption of notes on demand, and a clearing fee per issued note cleared through the Treasury. The system failed to satisfy a purported arbitrage condition: the yield on collateral exceeded the tax rate plus the product of the clearing fee and the average clearing rate of notes. The failure is explained by a model in which note issuers choose to issue notes only in trades that produce a low clearing rate (high float), but in which there are diminishing returns to additional note issue. (c) 2006 Elsevier B.V. All rights reserved.
Keywords:
under issue of bank notes
matching model
float
currency inelasticity
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