IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Money in a theory of exchange

  • Daniel L. Thornton

Major problems in monetary economics are to: introduce money into the economy in a way that explains how money arises endogenously; explain why money is preferred to other methods of exchange; and identify the welfare gains from using money. In this paper, Daniel L. Thornton develops a framework for assessing money's role in the economy and identifies the welfare gains associated with its use. In Thornton's framework, money is welfare enhancing not only because it reduces the resources necessary for exchange-thereby increasing both consumption and leisure-but, money further increases welfare by promoting further trade and greater specialization. ; Thornton then discusses the implications of his analysis for several important issues in monetary theory: the existence of fiat money; the role of money and credit in exchange; the asset demand for money; the buffer-stock notion of money demand; the welfare benefits of money; and the welfare costs of inflation.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://research.stlouisfed.org/publications/review/00/01/0001dt.pdf
Download Restriction: no

Article provided by Federal Reserve Bank of St. Louis in its journal Review.

Volume (Year): (2000)
Issue (Month): Jan ()
Pages: 35-60

as
in new window

Handle: RePEc:fip:fedlrv:y:2000:i:jan:p:35-60:n:v.82no.1
Contact details of provider: Postal:
P.O. Box 442, St. Louis, MO 63166

Fax: (314)444-8753
Web page: http://www.stlouisfed.org/

More information through EDIRC

Order Information: Web: https://research.stlouisfed.org/publications/ Email:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Dornbusch, Rudiger & Frenkel, Jacob A, 1973. "Inflation and Growth: Alternative Approaches," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 5(1), pages 141-56, Part I Fe.
  2. Jack Hirshleifer, 1973. "Exchange Theory- The Missing Chapter," UCLA Economics Working Papers 035, UCLA Department of Economics.
  3. Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
  4. Joseph A. Ritter, 1994. "The transition from barter to fiat money," Working Papers 1994-004, Federal Reserve Bank of St. Louis.
  5. Hicks, John, 1989. "A Market Theory of Money," OUP Catalogue, Oxford University Press, number 9780198287247, December.
  6. Kocherlakota, Narayana R., 1998. "Money Is Memory," Journal of Economic Theory, Elsevier, vol. 81(2), pages 232-251, August.
  7. Brunner, Karl & Meltzer, Allan H, 1971. "The Uses of Money: Money in the Theory of an Exchange Economy," American Economic Review, American Economic Association, vol. 61(5), pages 784-805, December.
  8. White, Lawrence H, 1984. "Competitive Payments Systems and the Unit of Account," American Economic Review, American Economic Association, vol. 74(4), pages 699-712, September.
  9. Dotsey, Michael, 1988. "The Demand for Currency in the United States," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(1), pages 22-40, February.
  10. Menger, Carl, 1892. "On the Origins of Money," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 2, pages 239-255.
  11. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 66(4), pages 545-556.
  12. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March.
  13. Oh, Seonghwan, 1989. "A theory of a generally acceptable medium of exchange and barter," Journal of Monetary Economics, Elsevier, vol. 23(1), pages 101-119, January.
  14. Fama, Eugene F., 1980. "Banking in the theory of finance," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 39-57, January.
  15. James B. Bullard, 1999. "Testing long-run monetary neutrality propositions: lessons from the recent research," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 57-77.
  16. Benhabib, Jess & Bull, Clive, 1981. "The Optimal Quantity of Money: A Formal Treatment," Working Papers 81-11, C.V. Starr Center for Applied Economics, New York University.
  17. Thornton, Daniel L., 1983. "Money, net wealth, and the real-balance effect," Journal of Macroeconomics, Elsevier, vol. 5(1), pages 105-117.
  18. Joseph M. Ostroy, 1972. "The Informational Efficiency of Monetary Exchange," UCLA Economics Working Papers 021, UCLA Department of Economics.
  19. Easterly, William, 1993. "How much do distortions affect growth?," Journal of Monetary Economics, Elsevier, vol. 32(2), pages 187-212, November.
  20. Niehans, Jurg, 1971. "Money and Barter in General Equilibrium with Transaction Costs," American Economic Review, American Economic Association, vol. 61(5), pages 773-83, December.
  21. Mason, Will E, 1976. "The Empirical Definition of Money: A Critique," Economic Inquiry, Western Economic Association International, vol. 14(4), pages 525-38, December.
  22. Barro, Robert J. & Fischer, Stanley, 1976. "Recent developments in monetary theory," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 133-167, April.
  23. Greenfield, Robert L & Yeager, Leland B, 1983. "A Laissez-Faire Approach to Monetary Stability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(3), pages 302-15, August.
  24. Jones, Robert A, 1976. "The Origin and Development of Media of Exchange," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 757-75, August.
  25. Hess, Alan C, 1971. "An Explanation of Short-Run Fluctuations in the Ratio of Currency to Demand Deposits," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 3(3), pages 666-79, August.
  26. Fischer, Stanley, 1986. "Monetary rules and commodity money schemes under uncertainty," Journal of Monetary Economics, Elsevier, vol. 17(1), pages 21-35, January.
  27. Alchian, Armen A, 1977. "Why Money?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 133-40, February.
  28. Robert E. Lucas, Jr., 1994. "On the welfare cost of inflation," Working Papers in Applied Economic Theory 94-07, Federal Reserve Bank of San Francisco.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fip:fedlrv:y:2000:i:jan:p:35-60:n:v.82no.1. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Xiao)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.