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The Appearance of Carriers and the Origins of Money

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  • Jose Noguera

Abstract

The purpose of this essay is to analyze the circumstances where a monetary economy dominates over a redistributive barter economy in which there is not an absence of double coincidence of wants problem. For this purpose, we develop a spatial general equilibrium model where individuals must trade with intermediaries to acquire the consumption goods that they need; exchange is costly, there is no trust, and individuals act in their own interest to maximize their utilities. The model is also used to address a number of issues in monetary economics like explaining the historical emergence of commodity-money, valued fiat money, the welfare-enhancing role of money, equilibria with several mediums of exchange, and split between the utility and the medium of exchange value of the good that serves as a medium of exchange. It also provides some interesting links between the monetary and urban economics literatures.

Suggested Citation

  • Jose Noguera, 2001. "The Appearance of Carriers and the Origins of Money," CERGE-EI Working Papers wp169, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp169
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    barter; medium of exchange; city size; carrier; merchant; transaction cost;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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