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Unit of account or medium of exchange?


  • Leland Yeager

    () (Aubum University, Aubum (USA))


Money evolved gradually as a cuitural product, it was not originally invented and imposed by the state (although it did Iater come under state domination). Historical evidence does not conclusively settle whether unit of account (numéraire) or medium of exchange evolved earliest. Quite plausibIy, one function carne first in some times and places, the other in others. Little of analytical importance hinges on the answer. Both functions are important in economie life and in monetary theory. Who knows how to measure and compare degrees of importance? IndirectIy or directly, as explained above, both functions have a quantitative aspect. Convenience does recommend a single numéraire within a currency area, but a well organized payments system can readiIy accommodate multiple media of exchange (if, indeed, notes and deposits of different banks and claims on other types of financial institution count as separate media). Much can be said in favor of separation of functions in the sense of a numéraire defined independently of any partieular medium of exchange.

Suggested Citation

  • Leland Yeager, 2007. "Unit of account or medium of exchange?," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 195-205.
  • Handle: RePEc:psl:bnlaqr:2007:24

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    References listed on IDEAS

    1. Kocherlakota, Narayana R., 1998. "Money Is Memory," Journal of Economic Theory, Elsevier, vol. 81(2), pages 232-251, August.
    2. Parth J. Shah & Leland B. Yeager, 1994. "Schumpeter on Monetary Determinacy," History of Political Economy, Duke University Press, vol. 26(3), pages 443-464, Fall.
    3. Joseph Aschheim & George S. Tavlas, 2006. "Money as mumeraire: doctrinal aspects and contemporary relevance," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 59(239), pages 333-361.
    4. Joseph Aschheim & George S. Tavlas, 2006. "Money as mumeraire: doctrinal aspects and contemporary relevance," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(239), pages 333-361.
    5. 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 302-315, August.
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    1. Is Bitcoin Doomed?
      by George Selgin in Free Banking on 2015-05-21 18:07:46

    More about this item


    exchange; money;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General


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