Monitoring and coordination for essentiality of money

Awaya Yu () and Fukai Hiroki
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Awaya Yu: Department of Economics, University of Rochester, Harkness 228,Rochester, NY 14627, USA
Fukai Hiroki: Chukyo University, Department of Economics, Syowa-ku, Nagoya-shi, Aichi, Japan

The B.E. Journal of Macroeconomics, 2020, vol. 20, issue 1, 7

Abstract: For money to be essential, environments have been considered in which there is imperfect monitoring of past actions and in which it is difficult to coordinate among economic agents. This paper provides an environment in which there is no monitoring of past actions while coordination is difficult. In this environment, we show that the first best allocation is achieved without money, and hence, money is not essential. The implication is that, for money to be essential, no monitoring is not enough but coordination must also be free.

Keywords: coordination device; essentiality of money; no monitoring (search for similar items in EconPapers)
JEL-codes: C73 E40 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1515/bejm-2019-0066

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