Search for a Theory of Money
NBER Working Paper No. 3482
The classical and early neoclassical economists knew that the essential function of money was its role as a medium of exchange; Recently, this idea has been formalized using search-theoretic noncooperative equilibrium models of the exchange process. The goal of this paper is to use a simple model of this class to analyze four substantive issues in monetary economics: the interaction between specialization and exchange, dual fiat currency regimes, the welfare improving role of money, and the susceptibility of monetary economies to extrinsic uncertainty.
Published: "A Search-Theoretic Approach to Monetary Economics" American Economic Review, March 1993, pp. 63-77.