Associate
Professor of Economics Ann Owen published an article with Christopher
Fogelstrom '03 titled "Monetary Policy Implications of Electronic Currency: An
Empirical Analysis" in the June 2005 issue of Applied Economics Letters. The paper, which investigates the impact
of the usage of electronic currency on money demand, was the research topic
Fogelstrom pursued with Owen as a Levitt Fellow in 2002 and for his senior
honors thesis in economics.
The topic
of this paper is pertinent for policy makers because, if the private
sector
issuance of electronic currency reduces the demand for currency issued
by the government, the implementation of monetary policy becomes more
difficult. One
of the findings included in the paper is that electronic currency is
not a
substitute for demand deposits, allaying concerns that private sector
issuance
of currency will inhibit the ability of central banks to conduct
monetary
policy.
The publication of this article is also related to current news, as Google announced recently that the company would offer a payment system similar to PayPal.
