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The essentiality of money in environments with centralized trade

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  • Araujo, Luis
  • Camargo, Braz
  • Minetti, Raoul
  • Puzzello, Daniela

Abstract

Lagos and Wright (2005) introduced an influential model of monetary exchange in which trade alternates between centralized and decentralized markets and money is essential. A limitation of their model and of the literature that follows is that they do not provide a microfoundation for the process of exchange in the centralized market. In this paper, we show that how one models exchange in the centralized market matters for the essentiality of money by describing the centralized market as a strategic market game and studying conditions under which money is essential.

Suggested Citation

  • Araujo, Luis & Camargo, Braz & Minetti, Raoul & Puzzello, Daniela, 2012. "The essentiality of money in environments with centralized trade," Journal of Monetary Economics, Elsevier, vol. 59(7), pages 612-621.
  • Handle: RePEc:eee:moneco:v:59:y:2012:i:7:p:612-621 DOI: 10.1016/j.jmoneco.2012.10.007
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    References listed on IDEAS

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    Cited by:

    1. Jonathan Chiu & Tsz-Nga Wong, 2015. "On the Essentiality of E-Money," Staff Working Papers 15-43, Bank of Canada.
    2. Anbarci, Nejat & Dutu, Richard & Feltovich, Nick, 2015. "Inflation tax in the lab: a theoretical and experimental study of competitive search equilibrium with inflation," Journal of Economic Dynamics and Control, Elsevier, pages 17-33.
    3. Athanasios Geromichalos & Jiwon Lee & Seungduck Lee & Keita Oikawa, 2016. "Over-the-counter trade and the value of assets as collateral," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 443-475.
    4. Araujo, Luis & Camargo, Braz, 2015. "Limited monitoring and the essentiality of money," Journal of Mathematical Economics, Elsevier, vol. 58(C), pages 32-37.
    5. repec:pit:wpaper:449 is not listed on IDEAS

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