A Walrasian Theory of Commodity Money: Paradoxical Results

Economics Working Papers / Department of Economics and Business, Universitat Pompeu Fabra ( web site)
(RePEc:upf:upfgen:480)

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.

Creation: Jun 2000
Keywords: Money, lemons

Related papers by JEL classification:
D50 D82 E40

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