Online Appendix: Distributed Ledgers

Online Appendix to the article Townsend, Robert M. (2019) " Distributed Ledgers: Innovation and Regulation in Financial Infrastructure and Payment Systems." This appendix contains links to literature underpinning the model used in the paper.


Statement of Cash Flow and Financial Accounts: What are the accounts, how to create them, where they can be used

Samphantharak, Krislert and Robert M. Townsend. 2009. Households as Corporate Firms: An Analysis of Household Finance Using Integrated Constructing Financial Statements from Integrated Household Surveys and Corporate Financial Accounting. Cambridge University Press.

Paweenawat, Archawa, and Robert M. Townsend. 2018. “The Impact of Regional Isolationism: Disentangling Real and Financial Factors,” Working Paper, MIT.

e-Transfers, e-Messages: Predominant use of paper currency in Thailand, contrasted with M-Pesa for Kenya

Alvarez, Fernando, Anan Pawasutipaisit, and Robert M. Townsend. 2018. “Cash Management in Village Thailand: Positive and Normative Implications.” Working Paper, MIT (presentation slides).

Jack, William, Tavneet Suri, and Robert M. Townsend. 2010. “Monetary Theory and Electronic Money: Reflections on the Kenyan Experience.” Economic Quarterly 96 (1): 83–122.

Contracts, Mechanism Design: Some basics, first principles

Harris, Milton and Robert M. Townsend. 1981. “Resource Allocation Under Asymmetric Information.” Econometrica 49 (1): 33-64.

Costly State Verification

Townsend, Robert M. 1979. “Optimal contracts and competitive markets with costly state verification.” Journal of Economic Theory 21 (2): 265-293

Limited Commitment, Punishment

Lehnert, Andreas, Ethan Ligon and Robert M. Townsend. 1999. “Liquidity Constraints and Incentive Contracts.” Macroeconomic Dynamics 3 (1): 1-47.

Kilenthong, Weerachart T. and Robert M. Townsend. 2018. “A Market Based Solution for Fire Sales and Other Pecuniary Externalities.” Working paper, MIT.

Moral Hazard

Prescott, Edward C. and Robert M. Townsend. 1984a. “Pareto Optima and Competitive Equilibria with Adverse Selection and Moral Hazard.” Econometrica 52 (1), 21–45.

Market Design and Regulation of Financial Infrastructure: Implemented as smart contracts

Townsend, Robert M. 1982. “Optimal Multiperiod Contracts and the Gain from Enduring Relationships under Private Information.” Journal of Political Economy 90.6: 1166-1186.

Phelan, Christopher and Robert M. Townsend. 1991. “Computing Multiperiod Information Constrained Optima.” Review of Economic Studies 58 (5): 853-883.

Karaivanov, Alexander, and Robert M Townsend. 2014. “Dynamic Financial Constraints: Distinguishing Mechanism Design from Exogenously Incomplete Regimes.” Econometrica 82 (3): 887-959.

Townsend, Robert M. 1988. “Information Constrained Insurance: The Revelation Principle Extended.” Journal of Monetary Economics 21 (2/3): 411-450.

Building Financial Infrastructure: Background, what is on the ground from Townsend Thai project, and mixed impact of interventions

Townsend, Robert M. 2016. “Village and Larger Economies: The Theory and Measurement of the Townsend Thai Project.” Journal of Economic Perspectives 30 (4):199-220.

Chiappori, Pierre-André, Krislert Samphantharak, Sam Schulhofer-Wohl, and Robert M. Townsend. 2014. “Heterogeneity and Risk Sharing in Village Economies.” Quantitative Economics 5(1):1-27.

Sripakdeevong, Parit and Robert M. Townsend. 2017. “The Village Money Market Revealed: Credit chains and shadow banking.” Working paper, MIT

Kinnan, Cynthia, and Robert Townsend. 2012. "Kinship and Financial Networks, Formal Financial Access, and Risk Reduction." American Economic Review, 102 (3): 289-93.

Samphantharak, Krislert, and Robert M. Townsend. 2018. “Risk and Return in Village Economies.” American Economic Journal-Microeconomics 10 (1): 1-40.

Building Financial Infrastructure: Interventions, impact and mechanisms

Kaboski, Joseph P. and Robert M. Townsend. 2011. “A Structural Evaluation of Large-Scale Quasi-experimental Microfinance Initiative.” Econometrica 79 (5):1357-1406.

Kaboski, Joseph P. and Townsend Robert M. 2012. “The Impact of Credit on Village Economies.” American Economic Journal: Applied Economics 4 (2):98-133.

Banerjee, Abhijit, Emily Breza, Robert M. Townsend and Diego Vera-Cossio. 2018. “Access to Credit and Productivity: Evidence from Thai Villages.” Working paper, University of California, San Diego.

Building Financial Infrastructure: General equilibrium perspective

Xandri, Juan Pablo. 2010. “Notes on "Perfect Competition, the Profit Criterion, and the Organization of Economic Activity" by Louis Makowski (1980)

Xandri, Juan Pablo. 2010. "Notes on "Financial Innovation in a General Equilibrium Model" by Wolfgang Pesendorfer (1995)"

Townsend, Robert, and Juan Pablo Xandri. 2018. “Regulation and the Optimal Design of Financial Markets.” Working paper, MIT (presentation slides).

Design of Improved Payment Systems

Townsend, Robert M. 1987. “Economic Organization with Limited Communication.” American Economic Review 77 (5): 954-971.

Regulating Payments Systems: Coordination and impossibility of decentralized exchange

Townsend, Robert M. and Neil Wallace. 1987. “Circulating Private Debt: An Example with a Coordination Problem” in Contractual Arrangements for Intertemporal Trade edited by Edward C. Prescott and Neil Wallace. Minneapolis, MN: University of Minnesota Press.

Crypto Currency: What is money

Lim, Youngjae and Robert M. Townsend. 1998. “General Equilibrium Models of Financial Systems: Theory and Measurement in Village Economies.” Review of Economic Dynamics 1 (1): 59-118.

Amberg, Niklas, Tor Jacobson, Erik von Schedvin, and Robert M. Townsend. 2016. “Curbing Shocks to Corporate Liquidity: The Role of Trade Credit.” NBER Working Paper No. 22286.

Insights from Mechanism Design

Doepke, Matthias and Robert M. Townsend. 2006. “Dynamic Mechanism Design with Hidden Income and Hidden Actions.” Journal of Economic Theory, 126 (1): 235-285.

Lessons from Monetary Theory for Value and Bubbles

Townsend, Robert M. 1980. “Models of Money with Spatially Separated Agents.” In Models of Monetary Economies, edited by John Kareken and Neil Wallace. Federal Reserve Bank of Minneapolis: 265-303.

Optimal Activist Policy

Townsend, Robert M. 1989. “Currency and Credit in a Private Information Economy.” Journal of Political Economy 97 (6):1323-1344.

Chandrasekhar, Arun G., Robert M. Townsend, and Juan Pablo Xandri. 2018. “Financial Centrality and Liquidity Provision.” Working paper, MIT.