TY  - JOUR
AU  - Hayashi,Fumio
AU  - Matsui,Akihiko
TI  - A Model of Fiat Money and Barter
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4919
PY  - 1994
Y2  - November 1994
UR  - http://www.nber.org/papers/w4919
L1  - http://www.nber.org/papers/w4919.pdf
N1  - Author contact info:
Fumio Hayashi
Hitotsubashi University
Grad. School of International Corporate Strategy
2-1-2 Hitotsubashi, Chiyoda-ku
Tokyo 101-8439
JAPAN
Tel: 81-3-5841-5652
Fax: 1-801-469-0086
E-Mail: fumio.hayashi@gmail.com
AB  - We present an infinite horizon model with capital in which fiat money and barter are two competing means of payment.  Fiat money has value because barter is limited by the extent of a double coincidence of wants.  The pattern of exchange generally involves both money and barter.  We find that the Chicago rule is sufficient for Pareto efficiency, while nominal interest smoothing is necessary.  For a specific utility function we provide a complete characterization of the patterns of exchange and calculate the range of inflation rates over which a stationary monetary equilibrium exists.
ER  -