Department of Economics and Business - Universitat Pompeu Fabra

Title:: A Walrasian theory of commodity money: Paradoxical results
Author:: Xavier Cuadras
Date:: June 2000
Abstract:: The objective of this note is to analyze some implications of the model of commodity money described in Banerjee and Maskin (1996) which may seem paradoxical. In order to do this, we incorporate a general production cost structure into the model. We focus on two different results. First, the existence of technologies that make counterfeiting a commodity more difficult may exclude it from being used as medium of exchange. Second, allocative distortions due to problems of asymmetric information may become larger in the presence of such technologies.
Keywords:: Money, lemons
JEL codes:: D50, D82, E40
Area of Research:: Macroeconomics and International Economics
Published in:: Bulletin of Economic Research, 52, 3, (2000), pp. 207-214

Download the paper in PDF format