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Presentations at an Academic or Professional conference (1998)

Is any Currency Reform "Neutral"? What Search Theory Teaches us.

BESANCENOT D., ROCHETEAU G., VRANCEANU Radu

This paper develops a search equilibrium model to explore the economic consequences of a currency reform which makes use of a decimal conversion rate. Agents differ in their ability to calculate the correct price in the former currency. Firms may attempt to discriminate between consumers in keeping with their individual heuristic conversions rates. As a consequence of this price distribution, consumers engage in a time-consuming search process for the lowest price. The post-reform equilibrium may involve a different price distribution, changes in the activity level and in the surplus of the various types of consumers.

BESANCENOT, D., ROCHETEAU, G. and VRANCEANU, R. (1998). Is any Currency Reform "Neutral"? What Search Theory Teaches us.