Money and Pecuniary Externalities in Economy with Digital Currencies

Student: Izgarsheva Iana

Faculty: International College of Economics and Finance

Educational Programme: Double degree programme in Economics of the NRU HSE and the University of London (Bachelor)

Final Grade: 8

Year of Graduation: 2018

The paper introduces the monetary model with trading rounds to analyze the effects of digital currency price on the steady-state of the economy. The mining for BitCoins is modelled through the inclusion of the electricity market with firms-produces that supply goods to households. The effects on consumption, the velocity of money and electricity are examined and are checked to be consistent with economic theory and empirical analysis. The main focus of the paper is on the electricity price, which is argued to be affected by mining dramatically. The empirical part suggests the non-linear relationship between prices for energy and cryptocurrency that is consistent with theoretical results.

Full text (added June 15, 2018)

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