CEP Discussion Paper No 1004 September 2010 There Will be Money Luis Araujo and Bernardo
نویسندگان
چکیده
A common belief among monetary theorists is that monetary equilibria are tenuous due to the intrinsic uselessness of fiat money (Wallace (1978)). In this article we argue that the tenuousness of monetary equilibria vanishes as soon as one introduces a small perturbation in an otherwise standard random matching model of money. Precisely, we show that the sheer belief that fiat money may become intrinsically useful, even if only in an almost unreachable state, might be enough to rule out nonmonetary equilibria. In a large region of parameters, agents’ beliefs and behavior are completely determined by fundamentals.
منابع مشابه
Money and Beliefs∗
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Article history: Received 25 September 2008 Revised 29 August 2009 Available online 11 September 2009 JEL classification: D83 E00
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