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Monitoring and coordination for essentiality of money

Author

Listed:
  • Awaya Yu

    (Department of Economics, University of Rochester, Harkness 228,Rochester, NY 14627, USA)

  • Fukai Hiroki

    (Chukyo University, Department of Economics, Syowa-ku, Nagoya-shi, Aichi, Japan)

Abstract

For money to be essential, environments have been considered in which there is imperfect monitoring of past actions and in which it is difficult to coordinate among economic agents. This paper provides an environment in which there is no monitoring of past actions while coordination is difficult. In this environment, we show that the first best allocation is achieved without money, and hence, money is not essential. The implication is that, for money to be essential, no monitoring is not enough but coordination must also be free.

Suggested Citation

  • Awaya Yu & Fukai Hiroki, 2020. "Monitoring and coordination for essentiality of money," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(1), pages 1-7, January.
    • Handle: RePEc:bpj:bejmac:v:20:y:2020:i:1:p:7:n:25
    DOI: 10.1515/bejm-2019-0066
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    References listed on IDEAS

    as
    1. Sugaya, Takuo & Wolitzky, Alexander, 2017. "Bounding equilibrium payoffs in repeated games with private monitoring," Theoretical Economics, Econometric Society, vol. 12(2), May.
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    4. Araujo, Luis, 2004. "Social norms and money," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 241-256, March.
    5. Gabriele Camera & Marco Casari, 2014. "The Coordination Value of Monetary Exchange: Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 6(1), pages 290-314, February.
    6. Luis Araujo & Bernardo Guimaraes, 2017. "A Coordination Approach to the Essentiality of Money," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 14-24, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    coordination device; essentiality of money; no monitoring;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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