Pulak Ghosh, Indian Insitute of Management-Bangalore
Jiasun Li, George Mason University
Qihong Ruan, Cornell University
Abstract: Using proprietary data from the predominant crypto exchange in India and the country's Household Inflation Expectations Survey, we document a significantly positive correlation between inflation expectations and individual cryptocurrency purchases. Higher inflation expectations are also associated with more new cryptocurrency investors. Investigating heterogeneity in multiple dimensions, we find that the effect is concentrated in Bitcoin (BTC) and Tether (USDT) investments. The findings are also robust after controlling for speculative demand captured by surveys of investors' expected cryptocurrency returns, and have causal interpretations confirmed using
instrumental variables. Our findings provide direct evidence that households already adopt cryptocurrencies for inflation hedging, which in turn rationalizes their high adoption in developing countries without a globally dominant currency.
Abstract: The growing importance of data as an input for platform businesses, combined with users' concerns about sharing their personal data, raises questions how to balance efficiency and fairness in governing these platforms. As a potential solution, we examine the decentralized governance of a platform that utilizes governance tokens issued to users. We explore the incentives for founders to establish platforms with decentralized governance and the resulting benefits for users. Decentralized platforms lead to a greater surplus for users compared to traditional, centrally governed platforms, enhancing fairness. In `data-heavy' platforms, a buy-back market for governance tokens emerges, enabling the founder to promote early platform adoption by committing to future transferability of tokens among users. Consequently, the platform's founder can achieve equal or greater output compared to a centrally governed platform, which provides a rationale for token issuance. Regulations that limit data sharing negatively impact stakeholders of decentralized platforms, while they might protect users in centralized ones. Token-based decentralized governance offers a way to align the interests of platform founders with those of users.
Abstract: We examine the impact of digital payments on the transmission of monetary policy. Leveraging administrative data on Pix, a digital payment system introduced by the Central Bank of Brazil, we find that Pix adoption has diminished banks' market power, making them more responsive to changes in policy rates. Subsequently, we estimate a dynamic banking model in which digital payment amplifies deposit elasticity through the household sector. Our counterfactual results reveal that digital payments amplify the monetary policy transmission by reducing banks' market power -- banks respond more to policy rate changes after Pix.
