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Coordination in the use of money

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  • Araujo, Luis
  • Guimaraes, Bernardo

Abstract

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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  • Araujo, Luis & Guimaraes, Bernardo, 2014. "Coordination in the use of money," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 38-46.
    • Handle: RePEc:eee:moneco:v:64:y:2014:i:c:p:38-46
    DOI: 10.1016/j.jmoneco.2014.01.009
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    Citations

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    Cited by:

    1. Bonetto, Federico & Iacopetta, Maurizio, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," Journal of Mathematical Economics, Elsevier, vol. 84(C), pages 207-224.
    2. 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.
    3. Camera, Gabriele & Gioffré, Alessandro, 2014. "Game-theoretic foundations of monetary equilibrium," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 51-63.
    4. Araujo, Luis & Guimaraes, Bernardo, 2015. "Intertemporal coordination with delay options," Journal of Economic Theory, Elsevier, vol. 157(C), pages 793-810.
    5. Pidong Huang & Manjong Lee, 2015. "Coordination on Use of Non-deferred Electronic Payment Instruments," Korean Economic Review, Korean Economic Association, vol. 31, pages 5-24.
    6. Eduardo Ferraciolli & Tanya Araújo, 2023. "Agent-based Modeling and the Sociology of Money: a Framework for the Study of Coordination and Plurality," Working Papers REM 2023/0285, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    7. Federico Bonetto & Maurizio Iacopetta, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," Post-Print hal-03403584, HAL.
    8. Bernardo Guimaraes & Luis Araujo, 2012. "The effect of options on coordination," 2012 Meeting Papers 474, Society for Economic Dynamics.
    9. Federico Bonetto & Maurizio Iacopetta, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," SciencePo Working papers Main hal-03403584, HAL.
    10. 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.
    11. Waknis, Parag, 2014. "A Leviathan central bank: Modeling seigniorage in a money search model," Economics Letters, Elsevier, vol. 125(3), pages 386-391.
    12. repec:hal:spmain:info:hdl:2441/48v4b2d60n9bipfp9hcmbgtucs is not listed on IDEAS
    13. Norman, Thomas W.L., 2020. "The evolution of monetary equilibrium," Games and Economic Behavior, Elsevier, vol. 122(C), pages 233-239.
    14. Federico Bonetto & Maurizio Iacopetta, 2019. "A Dynamic Analysis of Nash Equilibria in Search Models with Fiat Money ," Post-Print halshs-03515530, HAL.

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    More about this item

    Keywords

    Money; Beliefs; Coordination;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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