This thesis applies numerical methods to matching models of money and investigates some interesting topics and questions in monetary economics, which were previously unanswered due to the intractability typically accompanying such models.

The first chapter study some puzzling monetary phenomena in medieval Europe surrounding the debasement of coins. Such debasements were often followed by large minting volume and seigniorage profits, constituting the so-called debasement puzzle. In the meanwhile, old heavier coins were observed to co-circulate with new lighter coins, casting a doubt on Gresham's law. Building upon a matching-based commodity money model with multiple denominations, we offer a theory of coinage that appeals to divisibility and portability of commodity money. Coins...[ Read more ]

This thesis applies numerical methods to matching models of money and investigates some interesting topics and questions in monetary economics, which were previously unanswered due to the intractability typically accompanying such models.

The first chapter study some puzzling monetary phenomena in medieval Europe surrounding the debasement of coins. Such debasements were often followed by large minting volume and seigniorage profits, constituting the so-called debasement puzzle. In the meanwhile, old heavier coins were observed to co-circulate with new lighter coins, casting a doubt on Gresham's law. Building upon a matching-based commodity money model with multiple denominations, we offer a theory of coinage that appeals to divisibility and portability of commodity money. Coins are distinguished as different denominations by their metal contents. In a parameterized model, we find that the minting volume does surge following debasement while Gresham's Law may or may not hold.

The second chapter seeks to explore non neutrality of money in the dispersion of transition process following an unanticipated money injection. It examines the responses of the output and nominal price to shocks. We show that a certain class of money injection schemes will induce quantitatively significant and persistent response in output, sluggish price adjustment, and a short-run negatively-sloped Phillips curve. The short-run trade-off between output and inflation is not exploitable in the long run.