The Appearance of Carriers and the Origins of Money
José De J. Noguera
Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)
January 1, 2001
CERGE-EI Working Paper Series No. 169
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.
Number of Pages in PDF File: 34
Keywords: barter, medium of exchange, city size, carrier, merchant, transaction cost
JEL Classification: E00, D61, E41, N1, R11working papers series
Date posted: November 28, 2009
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