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Coordination in the use of money

Listed author(s):
  • Araujo, Luis
  • Guimaraes, Bernardo

Fundamental models of money, while explicit about the frictions that render money essential, are silent on how agents actually coordinate in its use. This paper studies this coordination problem, providing an endogenous map between the primitives of the environment and the beliefs on the acceptability of money. We show that an increase in the frequency of trade meetings, besides its direct impact on payoffs, facilitates coordination. In particular, for a large enough frequency of trade meetings, agents always coordinate in the use of money.

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File URL: http://www.sciencedirect.com/science/article/pii/S030439321400021X
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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 64 (2014)
Issue (Month): C ()
Pages: 38-46

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Handle: RePEc:eee:moneco:v:64:y:2014:i:c:p:38-46
DOI: 10.1016/j.jmoneco.2014.01.009
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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