The signalling role of municipal currencies in local development
Date
2005
Authors
Jayaraman, R.
Oak, M.
Editors
Advisors
Journal Title
Journal ISSN
Volume Title
Type:
Journal article
Citation
Economica, 2005; 72(288):597-613
Statement of Responsibility
Rajshri Jayaraman and Mandar Oak
Conference Name
Abstract
The last decade has seen the burgeoning of several hundred local community currency institutions in cities across the world. Although residents of these communities claim that local currency promotes local development, how it does so has hitherto been unexplored. We argue that the introduction of a municipal currency may serve as a signal of demand for local goods. Where demand uncertainty deters firms from investing in more productive technologies, such a signal improves the chances that technology choice will be optimal. The introduction of a local currency therefore always improves ex ante efficiency and may lead to ex post efficiency, with strictly higher levels of productivity and welfare.
School/Discipline
Dissertation Note
Provenance
Description
Access Status
Rights
Copyright The London School of Economics and Political Science 2005