Optimal Algorithmic Monetary Policy

  title={Optimal Algorithmic Monetary Policy},
  author={Luyao Zhang and Yulin Liu},
Centralized monetary policy, leading to persistent inflation, is often inconsistent, untrustworthy, and unpredictable. Algorithmic stablecoins enabled by blockchain technology are promising in solving this problem. Algorithmic stablecoins utilize a monetary policy that is entirely rule-based. However, there is little understanding of how to optimize the rule. We propose a model that trade-off the price for supply stability. We further study the comparative statics by varying several design… 

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