One or Two Monies?

Janet Hua Jiang and Mei Dong ()

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate whether money constitutes a perfect substitute for the missing record-keeping technology in a quasi-linear environment, where private information and limited commitment are present. We adopt the mechanism design approach and solve a social planner�s problem subject to the resource constraint, the incentive constraints imposed by the existing frictions, and the available memory technologies. The result is that when money is divisible, concealable and in variable supply, a single money may or may not be su¢ cient to replace the record-keeping technology. We further show that two monies serve as a perfect substitute for the record-keeping technology so that there is no need for a third money.

Keywords: Record-keeping; Money; Private Information; Limited Commit- ment; Mechanism Design (search for similar items in EconPapers)
JEL-codes: D82 E40 F30 (search for similar items in EconPapers)
Date: 2008-09-21
New Economics Papers: this item is included in nep-cta, nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: One or two monies? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14846

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