On the Threat of Counterfeiting

  title={On the Threat of Counterfeiting},
  author={Yiting Li},
We study counterfeiting of currency in a search-theoretic model of monetary exchange. In contrast to Nosal and Wallace (2007), we establish that counterfeiting does not pose a threat to the existence of a monetary equilibrium; i.e., a monetary equilibrium exists irrespective of the cost of producing counterfeits, or the ease with which genuine money can be authenticated. However, the possibility to counterfeit …at money can a¤ect its value, velocity, output and welfare, even if no… CONTINUE READING


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