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Money as a medium of transaction in the overlapping generations model

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  • Bruce Smith

Abstract

A definition of a transactions medium is proposed. This is that a transactions medium permits the attainment of otherwise unattainable resource allocations. It is shown that by this definition money can be a transactions medium in a pure exchange, overlapping generations economy. It is also shown that money is a transaction medium only if there are informational asymmetries of a particular type. Finally, it is shown that the set of economies for which money is a transactions medium is not isolated, in a well-defined sense.

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  • Bruce Smith, 1982. "Money as a medium of transaction in the overlapping generations model," Working Papers 216, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmwp:216
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    References listed on IDEAS

    as
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    6. 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.
    7. Bruce Smith, 1986. "Limited Information, Money, and Competitive Equilibrium," Canadian Journal of Economics, Canadian Economics Association, vol. 19(4), pages 780-797, November.
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