Jonathan Chiu - Latest
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On the Fragility of DeFi Lending
We develop a dynamic model to capture key features of decentralized finance lending. We identify a price-liquidity feedback: the market outcome in any given period depends on agents' expectations about lending activities in future periods, with higher future price expectations leading to more lending and higher prices in that period. -
Grasping De(centralized) Fi(nance) Through the Lens of Economic Theory
We analyze the value proposition and limitations of decentralized finance (DeFi). Based on a distributed ledger and smart contracts, DeFi can guarantee the execution of financial contracts, potentially lowering the costs of intermediation and improving financial inclusion. -
PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms
Why do BigTech platforms introduce payment services? We explore this using a model in which a monopoly platform faces a trade-off between the costs associated with privacy concerns and the revenue from data services. We then analyze the feedback effects between data and payments. -
What Drives Bitcoin Fees? Using Segwit to Assess Bitcoin's Long-Run Sustainability
We explore what drives transaction fees in the Bitcoin system and consider whether Bitcoin can remain tamper proof in the long run. -
Central Bank Digital Currency and Banking: Macroeconomic Benefits of a Cash-Like Design
Should a CBDC be more like cash or bank deposits? An interest-bearing, cash-like CBDC not only makes payments more efficient but also increases total demand. This has positive effects on other transactions, inducing more deposit taking and lending and, thus, bank intermediation. -
Payments on Digital Platforms: Resiliency, Interoperability and Welfare
This paper studies the business model choice between running a cash platform and a token platform, as well as its welfare and policy implications. -
Safe Payments
In a cashless economy, would the private sector invest in the optimal level of safety in a deposit-based payment system? In general, because of externalities, the answer is no. While the private sector could over- or under-invest in safety, the government can use taxes or subsidies to correct private incentives. -
Short-Run Dynamics in a Search-Theoretic Model of Monetary Exchange
We study the short-run effects of monetary policy using a search-theoretic monetary model in which agents are subject to idiosyncratic shocks and aggregate monetary shocks. -
The Economics of Cryptocurrencies—Bitcoin and Beyond
Since the creation of Bitcoin in 2009, over 2,000 cryptocurrencies have been issued. We evaluate how well a cryptocurrency functions as a payment system.