Coordination in the use of money

Luis Araujo () and Bernardo Guimaraes

Journal of Monetary Economics, 2014, vol. 64, issue C, 38-46

Abstract: Fundamental models of money, while explicit about the frictions that render money essential, are silent on how agents actually coordinate in its use. This paper studies this coordination problem, providing an endogenous map between the primitives of the environment and the beliefs on the acceptability of money. We show that an increase in the frequency of trade meetings, besides its direct impact on payoffs, facilitates coordination. In particular, for a large enough frequency of trade meetings, agents always coordinate in the use of money.

Keywords: Money; Beliefs; Coordination (search for similar items in EconPapers)
JEL-codes: D83 E40 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Working Paper: Coordination in the use of money (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:64:y:2014:i:c:p:38-46

DOI: 10.1016/j.jmoneco.2014.01.009

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