Limited monitoring and the essentiality of money

Luis Araujo () and Braz Camargo ()

Journal of Mathematical Economics, 2015, vol. 58, issue C, 32-37

Abstract: Monetary theory emphasizes that imperfect monitoring is necessary for money to be essential, that is, for money to achieve socially desirable allocations. Little is known about how limited monitoring must be if money is to be essential, though. Understanding sufficient conditions for the essentiality of money is important since monitoring is a natural way in which credit is introduced in monetary models. In this paper, we show that money can fail to be essential even if monitoring is quite limited. This indicates that one must be careful when introducing monitoring in monetary models to allow for the coexistence of money and credit.

Keywords: Limited monitoring; Essentiality; Community enforcement (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304406815000208
Full text for ScienceDirect subscribers only

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:eee:mateco:v:58:y:2015:i:c:p:32-37

DOI: 10.1016/j.jmateco.2015.03.004

Access Statistics for this article

Journal of Mathematical Economics is currently edited by Atsushi (A.) Kajii

More articles in Journal of Mathematical Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().