Equilibrium traits of durable commodity money

Taub, B. (1985) Equilibrium traits of durable commodity money. Journal of Banking and Finance, 9(1), pp. 5-34. (doi: 10.1016/0378-4266(85)90060-3)

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<p>A dynamic model of utility-maximizing agents explains why scarce, durable commodities are typically monetary. The model provides quantitative criteria for distinguishing between monetary and non-monetary durables, and is also used to analyze symmetallic equilibria.</p> <p>The model is then extended to analyze commodity-backed paper money. It is demonstrated that the backing generates trust in the paper money in the dynamic-consistency sense. The model predicts regular devaluations as an equilibrium phenomenon, but finds such behavior to be efficient. Finally, the results are integrated to make a technical point about dynamic models of pure fiat money.</p>

Item Type:Articles
Glasgow Author(s) Enlighten ID:Taub, Professor Bart
Authors: Taub, B.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of Banking and Finance
Publisher:Elsevier Ltd.

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