Working Paper: NBER ID: w26219
Authors: Max Raskin; Fahad Saleh; David Yermack
Abstract: This paper provides a systematic evaluation of the different types of digital currencies. We express skepticism regarding centralized digital currencies and therefore focus our economic analysis on private digital currencies. Specifically, we highlight the potential for private digital currencies to improve welfare within an emerging market with a selfish government. In that setting, we demonstrate that a private digital currency not only improves citizen welfare but also encourages local investment and enhances government welfare.
Keywords: Private Digital Currencies; Government Policy; Emerging Markets; Welfare; Local Investment
JEL Codes: E42; E5; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Private digital currencies (E42) | citizen welfare (I39) |
| Private digital currencies (E42) | welfare gains (D69) |
| Diversification benefits (G11) | welfare gains (D69) |
| Private digital currencies (E42) | restraint on monetary policy (E58) |
| restraint on monetary policy (E58) | lower inflation (E31) |
| Private digital currencies (E42) | local investment (F21) |
| local investment (F21) | government tax revenues (H20) |
| Government policy (F68) | citizen welfare (I39) |
| Government policy (F68) | government revenue (H27) |