CEP Discussion Paper No 1004 September 2010 There Will be Money Luis Araujo and Bernardo

نویسندگان

  • Luis Araujo
  • Bernardo Guimaraes
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.

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

Money and Beliefs∗

Monetary models with explicit microfoundations always exhibit equilibria where fiat money has no value and agents are strictly worse off. Such equilibria are usually viewed as natural, as an implication of the fact that valued fiat money is purely a belief-driven phenomenon. In this paper, we push the opposite view by showing that if there are enough gains from trade fiat money equilibria alway...

متن کامل

A coordination approach to the essentiality of money

The essentiality of money is commonly justified on effi ciency grounds. In this paper, we propose an alternative view on the essentiality of money. We consider an economy with limited monitoring where agents have to coordinate on the use of two alternative technologies of exchange, money and credit. We show that although credit strictly dominates money from an effi ciency perspective, money is ...

متن کامل

Markets and relationships in a learning economy

Article history: Received 25 September 2008 Revised 29 August 2009 Available online 11 September 2009 JEL classification: D83 E00

متن کامل

Social norms and money

In an economy where there is no double coincidence of wants and without public recordkeeping of past transactions, money is usually seen as the only mechanism that can support exchange. In this paper we show that, as long as the population is finite and agents are sufficiently patient, a social norm establishing gift-exchange can substitute for money. However, for a given discount factor, popul...

متن کامل

Endogenous supply of fiat money

We consider whether reputation concerns can discipline the behavior of a long-lived selfinterested agent who has a monopoly over the provision of fiat money. We obtain that when this agent can commit to a choice of money supply, there is a monetary equilibrium where it never overissues. We show, however, that such equilibria do not exist when there is no commitment. This happens because the inc...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

عنوان ژورنال:

دوره   شماره 

صفحات  -

تاریخ انتشار 2010