EconPapers    
Economics at your fingertips  
 

DECENTRALIZED EXCHANGE AND FACTOR PAYMENTS: A MULTIPLE-MATCHING APPROACH

Derek Laing, Victor E. Li and Ping Wang

Macroeconomic Dynamics, 2013, vol. 17, issue 1, 54-88

Abstract: The emergence of fiat money is studied in a multiple-matching environment in which exchange is organized around trading posts and prices are determined with a dynamic monopolistically competitive framework. Each household consumes a bundle of commodities and has a preference for consumption variety. We determine the endogenous organization of exchange between firms and shoppers, the means of factor payment (remuneration), and the prices at which these trades occur. We verify that the endogenous linkage of factor payments with the medium of exchange can lead to a monetary equilibrium outcome where only fiat money trades for goods, an ex ante feature of cash-in-advance models. We also examine the long-run effects of money growth on equilibrium exchange patterns. A key finding, consistent with documented hyperinflationary episodes, is that a sufficiently rapid expansion of the money supply leads to the gradual emergence of barter, where sellers accept both goods and cash payments and workers receive part of their remuneration in goods.

Date: 2013
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:17:y:2013:i:01:p:54-88_00

Access Statistics for this article

More articles in Macroeconomic Dynamics from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().

 
Page updated 2025-03-19
Handle: RePEc:cup:macdyn:v:17:y:2013:i:01:p:54-88_00