TY - JOUR
T1 - A contribution to the pure theory of money
AU - Kiyotaki, Nobuhiro
AU - Wright, Randall
N1 - Funding Information:
*This is a substantially revised version of our working paper “Fiat Money in Search Equilibrium.” We thank many friends, colleagues, and seminar participants in various places for helpful comments. Two anonymous referee reports were also extremely useful. Support from the Sloan Foundation, the Graduate School of the University of Wisconsin, the University of Pennsylvania Research Foundation, and the National Science Foundation (through Grants SES88-21225 and SES89-10777) is gratefully acknowledged. A part of this research was conducted while both authors were visiting the Federal Reserve Bank of Minneapolis, and we are grateful for its support; however, the views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System. Finally, Wright thanks the Hoover Institution at Stanford University. where he worked on this project as a National Fellow in 1989-90.
Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.
PY - 1991/4
Y1 - 1991/4
N2 - This article analyzes a general equilibrium model with search frictions and differentiated commodities. Because of the many differentiated commodities, barter is difficult in that it requires a double coincidence of wants, and this provides a medium of exchange role for fiat currency. We prove the existence of equilibrium with valued fiat money and show it is robust to certain changes in the environment. Rate of return dominance, liquidity, and the welfare implications of fiat money are discussed.
AB - This article analyzes a general equilibrium model with search frictions and differentiated commodities. Because of the many differentiated commodities, barter is difficult in that it requires a double coincidence of wants, and this provides a medium of exchange role for fiat currency. We prove the existence of equilibrium with valued fiat money and show it is robust to certain changes in the environment. Rate of return dominance, liquidity, and the welfare implications of fiat money are discussed.
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U2 - 10.1016/0022-0531(91)90154-V
DO - 10.1016/0022-0531(91)90154-V
M3 - Article
AN - SCOPUS:34548495689
SN - 0022-0531
VL - 53
SP - 215
EP - 235
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 2
ER -