Fiat Money as a Medium of Exchange
This paper presents a completely explicit exchange environment in which agents wishing to exchange one type of good for another choose to trade for fiat money, which is then traded for the desired goods. This exchange pattern is chosen over barter because specified properties of fiat money make this pattern less expensive than the search for a double coincidence of wants. Although the transaction services of money affect agents' utility, the model's welfare implications are those of the basic overlapping generations models, not those of models with money balances in the utility function. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Volume (Year): 30 (1989)
Issue (Month): 1 (February)
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