Payments, Velocity, Prices and Output
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Series
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Speaker(s)Dirk Niepelt (University of Bern, Switzerland)
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FieldMacroeconomics
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LocationTinbergen Institute Amsterdam, room 1.01
Amsterdam -
Date and time
November 14, 2024
16:00 - 17:15
Abstract
We analyze the payment sphere’s role for prices and output. Interest rates, intermediation margins, and convenience affect payment instrument portfolios, velocities, relative prices, the price level, and production. Velocity choices are constrained efficient, portfolio choices inefficient, and the Friedman rule is neither necessary nor sufficient for efficiency. Payments destroy value. Standard commodity price indices mis-measure consumer cost inflation, common Euler equations mis-represent the link between interest rates and consumption growth. Our framework integrates classical monetary theories and the equation of exchange and speaks to Gresham’s law and divisia aggregates.