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A model of commodity money

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  • Thomas J. Sargent
  • Neil Wallace

Abstract

Commodity money is modeled as one or two of the capital goods in a one-consumption good and one or two capital-good, overlapping generations model. Among the topics addressed using versions of the model are (i) the nature of the inefficiency of commodity money; (ii) the validity of quantity-theory predictions for commodity money systems; (iii) the circumstances under which one commodity emerges naturally as the commodity money; (iv) the role of inside money (money backed by private debt) in commodity money systems; and (v) the circumstances under which a government can choose the commodity to serve as the commodity money.

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  • Thomas J. Sargent & Neil Wallace, 1983. "A model of commodity money," Staff Report 85, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:85
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    References listed on IDEAS

    as
    1. Thomas M. Humphrey, 1982. "The real bills doctrine," Economic Review, Federal Reserve Bank of Richmond, vol. 68(Sep), pages 3-13.
    2. John Bryant & Neil Wallace, 1980. "A suggestion for further simplifying the theory of money," Staff Report 62, Federal Reserve Bank of Minneapolis.
    3. Wallace, Neil, 1981. "A Modigliani-Miller Theorem for Open-Market Operations," American Economic Review, American Economic Association, vol. 71(3), pages 267-274, June.
    4. Robert P. Flood & Peter M. Garber, 1987. "Gold Monetization and Gold Discipline," Palgrave Macmillan Books, in: Robert Z. Aliber (ed.), The Reconstruction of International Monetary Arrangements, chapter 10, pages 183-211, Palgrave Macmillan.
    5. Barro, Robert J, 1979. "Money and the Price Level under the Gold Standard," Economic Journal, Royal Economic Society, vol. 89(353), pages 13-33, March.
    6. Thomas J. Sargent & Neil Wallace, 1981. "The real bills doctrine vs. the quantity theory: a reconsideration," Staff Report 64, Federal Reserve Bank of Minneapolis.
    7. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    8. Sargent, Thomas J & Wallace, Neil, 1982. "The Real-Bills Doctrine versus the Quantity Theory: A Reconsideration," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1212-1236, December.
    9. Whitaker, John K, 1979. "An Essay on the Pure Theory of Commodity Money," Oxford Economic Papers, Oxford University Press, vol. 31(3), pages 339-357, November.
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