Paper #504

Títol:

Fiat money, intrinsic properties and government transaction policy

Autor:

Xavier Cuadras

Data:

Setembre 2000

Resum:

Why do people coordinate on the use of valueless pieces of paper as generally accepted money? A possible answer is that these objects have intrinsic properties that make them better candidates to be used as media of exchange. Another answer stresses the fact that unconvertible fiat money will not easily appear unless there is a centralized institution that favors its use. The main objective of the paper is to analyze these questions. In order to do this, we take a model of commodity money in which fiat money does not play any significant role and modify it to examine under which circumstances fiat money might come to circulate as medium of exchange. Some of the results obtained from the model differ in a rather substantial way from previous related literature.

Paraules clau:

Fiat money, government policy, search theory

Codis JEL:

C73, D83, E00

Àrea de Recerca:

Macroeconomia i Economia Internacional

Publicat a:

Manchester School, 72, 1, (2004), pp. 152-166.
Amb el títol:
Fiat Money in a Search Theoretical Model with Generalistic Consumers

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